The New World of Human Resources and Employment: How Artificial Intelligence and Process Redesign is Driving Dramatic Change 1949443027, 9781949443028

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Human Resource Management and Organizational Behavior Collection

The New World of Human Resources and Employment How Artificial Intelligence and Process Redesign is Driving Dramatic Change Tony Miller

The New World of Human Resources and Employment

The New World of Human Resources and Employment How Artificial Intelligence and Process Redesign is Driving Dramatic Change Dr. Tony Miller

The New World of Human Resources and Employment: How Artificial Intelligence and Process Redesign is Driving Dramatic Change Copyright © Business Expert Press, LLC, 2019. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means— electronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 250 words, without the prior permission of the publisher. First published in 2019 by Business Expert Press, LLC 222 East 46th Street, New York, NY 10017 www.businessexpertpress.com ISBN-13: 978-1-94944-302-8 (paperback) ISBN-13: 978-1-94944-303-5 (e-book) Business Expert Press Human Resource Management and Organizational Behavior Collection Collection ISSN: 1946-5637 (print) Collection ISSN: 1946-5645 (electronic) Cover and interior design by S4Carlisle Publishing Services Private Ltd., Chennai, India First edition: 2019 10 9 8 7 6 5 4 3 2 1 Printed in the United States of America.

Abstract Artificial Intelligence (AI) will change the world as we know it within only a few years. Its most significant impact will be on our Human Resource (HR). What is AI and what’s made it significant are contained in this concise book. The book has a wide readership and will provide for many organizations the catalyst for swift change to take strategic advantage of what AI has to offer. In this book are some of the HR processes that can be changed today, suggestions on what’s available, and some resources you may wish to use. The evidence so far is that many HR functions have not developed AI strategies, in a false belief that AI is in the future. But it’s here and it’s happening, and the change is expediential in its growth; we are in the change window for a massive paradigm shift, now is the time for immediate action. The arrival of cognitive deep learning in AI will herald a massive paradigm shift in employment. The change is happening now. At the forefront of the change will be the human resource. This book is the catalyst for change many HR functions will need. Advice on progress with AI and specifically HR processes that will be most directly affected are contained within this concise book. This is truly a golden opportunity for human resource professionals, organizational designers, business managers, business students, and workforce planners. Organizations that act, and act fast, will be the beneficiaries of the AI revolution.

Keywords algorithms; artificial intelligence; automation; bonus; change; change; cognitive learning; compensation; deep learning; Generation Z; human resources; iGen; organizational design (OD); paradigm shifts; poor performers; process re-engineering; recruitment; robots; talent; talented; unemployment; Universal Basic Income (UBI); workforce planning

Contents Chapter 1 What Is Artificial Intelligence and What Is Its Impact Going to Be?..................................................1 Chapter 2 Human Resources—On the Front Line for a Change....................................................................11 Chapter 3 How AI and Process Redesign Will Impact on Organizational Structures and Reducing Headcount— Rightsizing Your Organization...................43 Chapter 4 Aligning HR Processes with AI—Productivity Measurement and Performance Appraisal.........................55 Chapter 5 Automating Training Needs Analysis and Training Evaluation........................................................................79 Chapter 6 Digital Footprints and How They Can be Used to Upgrade Recruitment and Succession Planning—The End of Testing?........................................85 Chapter 7 Pay and Rewards..............................................................99 Chapter 8 New Skills Needed to Manage This Massive Paradigm Shift from Traditional HR To Artificial Intelligence focused HR.................................................105 Chapter 9 Useful Formula and the Productivity Dashboard............109 References............................................................................................121 About the Author.................................................................................125 Index..................................................................................................127

CHAPTER 1

What Is Artificial Intelligence and What Is Its Impact Going to Be? Historical Development Unprecedented changes are happening in the world of work. What is of particular interest is, they are all happening at the same time. We have the most significant advancement in artificial intelligence (AI) Figure 1.1, which is now working, and it is beyond our full comprehension. What is staggering—this has been happening dramatically since 2014. It is causing a massive paradigm shift that is irreversible, and it will change life and work, as we know it forever. To put this into context, if one looks at the development of humankind from 9000 BC to date, what we see in the past few years is expediential growth (Bauckhage 2017). The development of the gross world product has outstripped anything that has cumulatively happened before—and it has happened dramatically fast. Three predictions that were quoted by Bauckhage: By 2027 every process will be managed by A.I. (Bauckhage 2017, University of Bonn, Germany) By 2027 70% of all S&P companies will have disappeared. (­McKinsey 2016) 60% of all professions will be affected by automation. (McKinsey 2016)

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Where are we now?

Programing a computer

Every step had to be written in code– massively time consuming

Machine learning

The computer learns by algorithms, and can learn by itself

Deep learning

The deep learning algorithm allows the computer to learn and solve problems we don’t understand; it’s ability seems amazing with no apparent limitations.

Figure 1.1  Significant development steps

If you do not have a strategy for AI already, you need to activate one now. Progress is moving so fast that organizations cannot afford to wait; changes will not wait—for sure. AI has come to the fore because of three significant factors. 1. The first is what we refer to as Big Data. We now can manipulate vast quantities of stored data and with these data can produce predictive outcomes. What’s been in the press often is, how our digital footprint is now being used. From the moment you ever switched on a computer, mobile phone, or tablet or used a credit card, data have been recorded, stored, shuffled, packaged, and sold by companies such as Axiom. Big Data is now available to all. 2. The next is affordable high-powered computing. Processing speeds and storage have increased, and the prices of computing have dramatically dropped. We now have quantum computers, some of which allow free access. 3. The final is the emergence of deep learning systems. These are systems that start to learn by themselves using cognitive learning—no need for old-style programming.



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The formula then is BD + HPC + DLS = AI. You will hear the term neuro networks being used quite frequently these days; so, here is an attempt to explain what they are. In Figure 1.2, here we have the straightforward mathematical computation an input, weighting and addition, then that gives us a mathematical output. AI, particularly deep learning, develops things further and has made rapid strides in a relatively short span of time. In AI, we connect many layers of neurons; in fact, today we have millions of these as paired inputs and likewise a multitude of outputs. Deep neural networks are vast and very complicated; the big breakthrough that happened recently is that these networks now have cognitive ability to process; this has caused a dramatic improvement and change. It can be called self-thinking. The program automatically alters the weighting and keeps self-adjusting until it achieves predetermined outcomes Figure 1.3. The person credited for this is probably Geoffrey Hinton, the company who has been most instrumental in exploiting this GOOGLE. To instruct AI and to get it to solve problems, we use algorithms. An algorithm is a detailed series of instructions for carrying out an operation or solving a problem. In a nontechnical context, we use algorithms

Mathematical neuron INPUT X1

Weighted W

ADDED

W X2 W

X3

Figure 1.2  A mathematical neuron

OUTPUT

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INPUT

Hidden layer

Hidden layer

Hidden layer

OUTPUT

Figure 1.3  Deep neural network

in everyday tasks, such as a recipe to bake a cake or a do-it-yourself handbook. AI system computers use algorithms to list the detailed instructions for carrying out an operation. For example, to compute an employee’s pay check, the computer uses an algorithm. To accomplish this task, appropriate data are entered into the system. What makes this particularly efficient is that, various algorithms can accomplish operations or problem solving easily and quickly. However, it is important to note that a programming algorithm is not a computer code. It is written in simple English (or whatever the programmer speaks). It does not beat around the bush—it has a start, middle, and an end. In fact, you will probably label the first step start and the last step end. It includes only what you need to be able to carry out the task. It does not include anything unclear, or ambiguous (Study.com 2018). There are breakthroughs in every area of business; the finance industry, for example, has found that AI is a better and safer way to do trading.

The Different Types of AI When you decide to use AI, it is better if you confine yourself to your business needs rather than getting embroiled in the technologies that AI offers. Only then can you get the best results. For organizations, there are three main categories.



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Process Automation Process automation is probably the easiest to understand and is the automation of digital and physical tasks. These are typically back-office administrative and financial activities. Process automation could also involve robotic processes and automation technologies This approach is probably the least expensive and most accessible to implement as far a computing is concerned it is the most simple. This can be done using current technology now. In an example from Davenport and Ronanki (2018), NASA used process automation to look at its human resources (HR). In the HR application, it found that 86 percent of the transactions were completed without any human intervention. HR professionals need to pay attention to this advancement made by NASA. Cognitive Insight This is the second most common area of AI and the area that potentially will have the most impact on HR and the way that we work. This process uses algorithms to detect patterns in vast volumes of data and interpret their meaning. When this is coupled with deep learning, AI has the potential to take off to great heights. Cognitive insight is mainly referred to as deep learning, and in applications where this has been used, the results have been nothing short of amazing. AI and deep learning are rapidly growing and expanding into every area of business. A qualified doctor, who is a specialist in cancer diagnosis, may take 2 or 3 hours looking at X-rays to diagnose correctly the symptoms that the patient may be suffering. Using deep learning, the same work can be carried out using AI in .03 of a second. AI is becoming more accurate than a diagnosis of a panel of doctors, and is improving every day. AI is also being linked to robotics; we have seen this with self-driven cars. But the reality is on the West Coast of America. Large articulated trucks have been using this system for years. So, we have here a combination of AI and robotics on a scale never seen before. The sheer size and scale of what’s possible is incredible. Fox Conn used to pay its workers $2.50 an hour. But it was cheaper to replace

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the workers with Fox Bots (small AI Robots); a decision to change over to this system resulted in AI Fox Bots replacing 40,000 people in their Chinese factory (Diamansis 2017). Other predictions are it is estimated that 47 percent of U.S. labor is likely to be replaced by automation (F.com 2017). Cognitive Engagement This is where AI technology is used to interact with us humans. Examples are where organizations have a customer interface, which is entirely driven by AI. Intelligent agents are available 24/7 to help customers and provide them with correct information. The medical technology giant Beckton Dickinson in the United States is using lifelike intelligent agent advertiser Amelia to serve as an internal employee in its helpdesk for IT support. SE Bank recently made Amelia available to customers to test its performance and the customer response (Davenport and Ronanki 2018). But, it is also a fact that such agents are not being effectively used by some organizations mainly because of conservatism and misunderstanding of how beneficial this technology can be. In our personal lives, we seem to have already embraced Apple’s Siri, Amazon’s Alexa, Google Assistant, and Microsoft Cortana, all of which are forms of AI.

AI Today and Case Studies Today, AI is very advanced; let me quote from Prof M Kosinski to buttress this to stress point. Computer algorithms, deep learning models are now way too complicated for humans to understand. AI will impact every facet of our lives for those of us in HR. But for this to happen, we need to make effective changes to our business strategies in order to prepare and manage this paradigm shift adequately. This change is happening now. For HR professionals, there has never been



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such a big challenge and opportunity. Some assistance to use AI may be sought from the following: • Google Tenser Flow. It is the AI software that Google uses, and it is a library of information that is available for free. Google is devising plans to run 80 percent of all the world’s AI applications on this platform. • Tenser Flow is currently being used by the U.S. Army (Summerlad 2018). • Facebook has open-sourced its neural network libraries. • Microsoft has open-sourced its computational network tool kit. • The new-age Quantum Computers is now available, and some companies like D Wave are allowing free access to this. • In August 2018, Apple became the first trillion dollar company in the United States (Gurman 2018). • In China, they are currently producing $5 chipsets that give AI enablement (Diamansis 2017). China is leading the world in AI start-ups. Russian President Vladimir Putin, in a CNN interview, made the following comment: ‘Artificial intelligence is the future, not only of Russia, but of all of mankind,’ Russian President Vladimir Putin said. ‘Whoever becomes the leader in this sphere will become the ruler of the world’ (Gigova 2017). Algorithms feed AI; this is an entirely different technique that is used for problem solving today. This year, we have seen people solve challenging problems in the field of medicine without having any medical background or experience. This is the uniqueness of algorithms and deep learning. The following is a quick definition of an algorithm: An algorithm is a detailed series of instructions for carrying out an operation or solving a problem. In a nontechnical context, we use algorithms in everyday tasks, such as a recipe to bake a cake or a do-it-yourself handbook, as mentioned earlier. (Study.com 2018)

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AI and Some Case Studies from IBM Watson Case 1 Crédit Mutuel Crédit Mutuel has trained IBM Watson to help its client advisers provide customers with quick and comprehensive information on a whole set of offerings, from car and housing insurance to a range of savings and investment products. “It is impossible for our customer advisors to know all of our 200 products. So we provide them with tools to have the right information for the right client,” said Mathieu Dehestru, Head of Transformation, Marketing and Big Data at Crédit Mutuel insurance. “Watson gives more time to our client advisors, so they have more time for client relationships.” Thanks to its Watson-powered e-mail analyzer and its four virtual assistants, Crédit Mutuel is enriching interactions between client advisers and customers. Watson has made it possible to find the right answers to problems 60 percent faster. It helps deflect and address 50 percent of the 350,000 daily e-mails received by the bank’s client advisers. Watson has absorbed over 600,000 pages of documentation, from reports to correspondence. The machine-learning model has been continuously updated to be able to analyze a higher volume of records. Over 80 percent of Crédit Mutuel employees have adopted Watson for their day-to-day work. Earlier, these employees used to spend 80 percent of their time researching problems and 20 percent fixing it. Now, Watson has reversed this trend.

Case 2 Woodside Before Watson took charge, Woodside’s engineers spent up to 80 percent of their time trying to uncover possible solutions or hazards, and only 20 percent of their time on the actual engineering work. With Watson, the time spent on researching has been reduced by 75 percent, because Watson enables easy access to decades of wisdom and learning built up by Woodside’s employees.



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Case 3 Korean Air Korean Air has a year’s worth of historical maintenance records for hundreds of aircraft in its fleet. However, until recently, this vast amount of critical data was virtually unsearchable. This meant that maintenance technicians had to diagnose and fix issues without being able to tap into or interpret implications from valuable past learning and courses of action. Watson ingested structured and unstructured data from multiple sources, including technical guidelines, nonroutine logs, technician notes, inventory, troubleshooting time and material cost data, and in-flight incident history. Watson Explorer, using Natural Language Understanding, and advanced content analytics have enabled previously hidden connections that now help maintenance crews to diagnose and solve problems more quickly, with more confidence. Further, if an issue occurs in flight, the cabin crew can report it immediately to ground operations. Watson will access data from similar issues in the past and compare this information against technical guidelines including necessary materials and fixing time. Maintenance technicians fix the issue on the ground and enter their actions into the system to add to Watson’s knowledge. With the help of Watson, maintenance managers can also identify the trends of issues in each season and can take these insights to the original equipment manufacturers for improvement. Over 200,000 maintenance cases per year are addressed 90 percent faster. Korean Air needs their over 2,000 maintenance employees to be able to act faster. When Watson delivered actionable insights on the root causes of problems and their solutions, Korean Air shortened its maintenance defect history analysis lead times by 90 percent. The maintenance employees can now see patterns of defect and failure on equipment quickly so as to take preventive steps in their work. Such preventive measures also allow them to spend more time getting people places on time in their fleet and to work to keep their 25 million passengers happy.

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To conclude this chapter, here is an exciting quote from Elon Musk: ‘I am quite close, I am very close, to the cutting edge in A.I. and it scares the hell out of me,’ said Musk. ‘It is capable of vastly more than almost anyone knows and the rate of improvement is ­exponential’ (Musk 2018).

CHAPTER 2

Human Resources—On the Front Line for a Change Reality Everything we have seen about AI points to an underlining issue—less people and a 24/7 approach to all work. Employers and governments are faced with the task of finding a balance between how to deal with a problem and what to do with surplus employees. It sounds simple, but it is very complicated. Change cannot be halted, and the drive for maximizing AI is now unstoppable. This is a challenge for government and not for HR

The Massive Impact for Employment Numbers There are currently four factors that will make the biggest changes in our lifestyle and the way we work (Figure 2.1). We have already looked at AI. The other issues that will impact human resources include aging workforce, hours of work, and universal basic income. AI, robotics, and process redesign will all vastly reduce the need for people in all organizations worldwide. Now, here are some points to consider (Miller 2018): The Aging Workforce The first is to do with an aging workforce. In the West and Far East, the aging skilled workforce is becoming a big problem. Today, governments realize that pension funds are insufficient, and therefore, the trend across the world is to raise the age of retirement. Retiring at 70 has been proposed and looks like being implemented. In the United Kingdom, one suggestion is to raise the retirement age to 73 before 2020.

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UBI

Less Hours

Masive Change

Artificial Intelligence

Older Workers

Figure 2.1  Massive change

In the United States, 16.6 percent of the population will be over 65 by 2020; in Germany, it will be 21.6 percent (Roth CBS). In Japan, people aged 65 and above account for 51.7 percent of the workforce—including women (Nikkei Asia review 2016). The following are three critical factors about age and employment: • Governments are probably unlikely to be able to support the aging workforce. • Employers have invested a lifetime of training and education on senior employees—why let them go? • The massive increase in robotics complements an aging workforce perfectly. Work opportunities for youth do not look good, the evidence for which can be seen everywhere. Fresh graduates end up working in coffee shops or taking up other low-paid semiskilled work. A big challenge for employers will be Generation Z or i Gen as they are known. This group will be discussed later in the book.



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Fewer Hours of Work Thanks to the rapid advancement of technology, like the use of robotics, combined with the aging workforce, working hours are getting reduced. For example, Germany’s workforce has successfully negotiated a 28-hour working week. (Financial Times 2018) If the use of robotics and AI is accelerated, it will also give employers the opportunity to rightsize their organizations, also bringing massive financial benefits along with it. Rightsizing is already becoming an essential management tool and for a good reason. Universal Basic Income (UBI) What is universal basic income (UBI)? It is a model for providing all citizens of a country or another geographic area with a given sum of money, regardless of their income, resources, or employment status. The purpose of UBI is to prevent or reduce poverty and increase equality among citizens. UBI is also known as just basic income. According to the advocacy group Basic Income Earth Network (BIEN), the essential principle behind basic income is the idea that all citizens are entitled to a livable income, whether or not they contribute to production, and irrespective of the particular circumstances into which they are born. BIEN lists the following five defining characteristics of basic income: 1. Periodic: Distributed in regular payments 2. Cash payment: Distributed as funds rather than, for example, vouchers for goods or services 3. Individual: Each citizen (or adult citizen) receives the payment, rather than each household. 4. Universal: All citizens receive the payment. 5. Unconditional: Recipients are not required to demonstrate the need or willingness to work. In the most common UBI implementation method, equal periodic payments are made to all individuals and the tax system ensures that funds are returned to the system from those with higher incomes. Usually, the

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amount is gauged for subsistence: enough to take care of the individual’s basic needs but not enough to provide many frills. UBI is one example of a guaranteed income model. The main alternate model is a guaranteed minimum income system, sometimes called a basic income guarantee, which involves varying needs-based supplements designed to ensure that all citizens have enough to live on. Recently, UBI has been in the news as the proposed way to support a workforce displaced by automation. Musk, Zuckerberg and many others believe that robots and AI-enhanced software may replace most human labor in a not-too-distant future; this scenario is sometimes called the robot economy. Critics of guaranteed income argue that such an automation-based system would be too expensive to implement and would create a disincentive to work. Proponents, on the other hand, believe that it could be cheaper in the long run, considering the effects of poverty, and that, furthermore, it would promote creativity and entrepreneurship among those freed from the struggle to work. (Murphy 2018) Who Is Driving UBI? The people leading this push toward UBI are names that you would recognize—Mark Zuckerburg owner of Facebook, Travis Kalanick co-founder Uber, Elon Musk, former CEO and owner of Tesler, and the late Stephen Hawkin, also from Silicon Valley, and Sam Altman, owner of  Y Combinator. Why Do We Need It? The rapid advance in the use of robotics and AI, particularly deep thinking, will change the face of employment, as we know it by 2020. The unemployed and the unemployable will increase, unless the world is prepared to accept a rapid increase in crime and discord. Are People Happy at Work? Are people happy at work? No. The figures for the United Kingdom and Germany seem very similar; 33 percent of the population are not happy at work. If this surprisingly high figure is the same worldwide, it would be a big boost for UBI advocates.



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What Do the Figures Look Like, and Are They Viable? The cost of UBI is often misunderstood and greatly exaggerated. A simple, “back-of-the-envelope” estimate of the net cost of a UBI is set at about the official poverty line: $12,000 per adult and $6,000 per child with a 50 percent “marginal tax rate.” These back-of-the-envelope calculations present a muchsimplified UBI scheme meant not as a practical proposal but as a method to obtain a ballpark estimate of the cost of UBI in isolation. Even with simplifying assumptions, these figures are several times more accurate than many common but exaggerated estimates. Key findings of this study include the following. The net cost—the real cost—of this UBI scheme is $539 billion per year: about one-sixth of its often-mentioned but not-very-meaningful gross cost of about $3.415 trillion. The net cost of this UBI scheme is • less than 25 percent of the cost of current U.S. entitlement spending, • less than 15 percent of overall federal spending, and • about 2.95 percent of Gross Domestic Product. The average net beneficiary is a family of about two people making about $27,000 per year in a market income. The family’s net benefit from the UBI would be nearly $9,000, raising their income to almost $36,000 (Widerquist 2017).

The Need for HR Strategy Now AI will have a massive impact on employee numbers, because for the first time since the Industrial Revolution, the numbers of employed will significantly decrease (Figure 2.2). This trend is likely to continue, and it seems irreversible. HR has functioned for many years, but it has not been a part of any strategic thinking group. Now is the time to change that. HR must embrace strategy as it is the crucial organizational tool for implementing change. AI will require many strategies to be agreed and put in place in the immediate future. HR needs to be the catalyst for this change. If you examine the traditional model; Vision to action. HR will have an active and critical role to play at the top four levels of the process (Figure 2.3).

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Employees numbers before and after A.I. BEFORE

AFTER

Figure 2.2  Impact on employee numbers

Often, the directors’ views are sought at stage 3 (strategy formulation) by others who are responsible for the central strategic plan. In some instances, business professionals are presented with a completed strategic plan and then required to produce their operating plans for the next year or two. With so much potential and knowledge, it defies logic that professionals are not involved in this process, right from the concept stage of the vision. Evidence shows us that in many organizations the business professional’s function is viewed as a “process” and not thought of as an added value component of the organization. To change that perception and to gain access to the crucial point in the decision-making process is vital. Involvement in stages one to seven does mean having a much more comprehensive view of the business areas and being able to contribute with real added value concepts. Working at the strategic level is a vital requirement for professional functions if they are genuinely going to be seen as an added value. The challenge is gaining enough credibility to get involved in the process at the early stages. The whole process of having a vision and turning it into individual actions can be broken down into seven levels.

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1 - 12 months

Individual Plan

1 - 12 months

Team Plan

1 year

Department Plan

1 - 2 years

Operating Plan

5 - 10 years

Strategy

10 - 15 years

Mission

15 - 20 years

Vision

Figure 2.3  HR’s role at the four critical levels

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

HR's role in the four key levels

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The “hill of vision” is perhaps the quickest way to see the overall process. Depending on where you are in the organization and whether you are a “contributor” or “actioner”, you will have a different view of “the future”. The larger the organization, the more significant the challenge to ensure everyone understands what the vision and mission are of your company. It has little to do with whether the organization is in the public or private sector; the communication challenge is still the same. It is often the case that employees at level seven cannot see the wood for the trees. If that is the case, then how can they fully contribute to the organizational objectives? The “hill of vision” therefore is a reflection on how different groups within the organization see “the future”. A brief description of the Vision and Mission follows after which we will examine the all-important strategy and its sibling, the operating plan. The Vision (Level 1) It is what it says it is; a hope, concept, or direction about the future. Usually, one sentence encapsulates the future. The Mission Statement (Level 2) The Mission Statement should give every employee a clear understanding of values, targets, and output expected. Mission statements are, therefore, not so easy to produce. If they are too long, their meaning and purpose becomes unclear; if they are too short, they sound similar to a vision statement. Unfortunately, most of the corporate mission statements are not effective. They consist mainly of pious platitudes such as “We will hold ourselves to the highest standards of professionalism and ethical behavior.” They often formulate necessities as objectives; for example, “to achieve sufficient profit”. This is like a person saying his mission is to breathe sufficiently. A mission statement should not commit a firm to what it must do to survive but to what it chooses to do to progress. Nor should it be most prominent, best, optimum, and maximum; for example, one company says it wants to “maximize its growth potential”, another “to provide products of the highest quality”. How in the world can a company determine whether it has attained growth potential or highest quality?



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To test for the appropriateness of an assertion in a mission statement, determine whether it can be disagreed with reasonably. If not, it should be excluded. Can you imagine any company disagreeing with the objective “to provide the best value for the money”? If you cannot, well it is not worth saying. What characteristics should a mission statement have? 1. It should contain a formulation of the firm’s objectives that enable progress toward them to be measured. To state objectives that cannot be used to evaluate performance is hypocrisy. Unless the adoption of a mission statement changes the behavior of the firm that makes it, it has no value. The behavior of a Mexican firm was profoundly affected by the following passage from its mission statement (Miller 2017a): To create a wholesome, varied, pluralistic, multiclass recreational area incorporating tourist facilities and permanent residences, and to produce locally as much of the goods and services required by the area as possible, to improve the standard of living and quality of life of its inhabitants. 2. A company’s mission statement should differentiate it from other companies. It should establish the individuality, if not the uniqueness of, the firm. A company that wants only what most other companies want—for example, “to manufacture products efficiently, at a cost that helps yield adequate profits”—wastes its time in formulating a mission statement. Individuality can be attained in many ways, including that in which a company’s business is defined. 3. A mission statement should define the business that the company wants to be in, not necessarily is in. However diverse in its current business, it should try to find a unifying concept that enlarges its view of itself and brings it into focus. For example, a company that produces beverages, snacks, and packaged goods and operates a variety of dining, recreational, and entertainment facilities identified its business as “Increasing the satisfaction people derive from the use of their discretionary time”. This suggested completely new directions for its diversification and growth. The same was true of a company that said it was in the “sticking” business, enabling objects and materials to stick together.

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4. A mission statement should be relevant to all the firms’ stakeholders. These include its customers, suppliers, the public, shareholders, and employees. The mission should state how the company intends to serve each of them; for example, one company committed itself “to providing all its employees with adequate and fair compensation, safe working conditions, stable employment, challenging work, opportunities for personal development, and a satisfying quality of work life”. It also wanted “to provide those who supply the material used in the business with continuing, if not expanding, sources of business, and with incentives to improve their products and services and their user research and development”. Most mission statements address only shareholders and managers. Their most serious deficiency is their failure to motivate nonmanagerial employees. Without the commitment from these employees, a company’s mission has little chance of being fulfilled, whatever its managers and shareholders do. A mission statement should be exciting and inspiring. It should motivate all those whose participation in its pursuit is sought; for example, one Latin American Company committed itself to be “an active force for economic and social development, fostering economic integration of Latin American countries and, within each country, a collaboration between government, industry, labor, and the public”. AI will require most organizations to rewrite their mission statements. Strategy (Level 3) The strategy is the key to it all. Over many years it has become apparent in organizations that those who contribute to control and execute the strategy have the power. Strategy is a level three organizational tool and is the critical element for specifying what needs to be done, Why it needs to be done, and When it needs to be done; AI will not wait for you, but it will overtake you—get started quickly. Strategy is usually focused on business growth, improved productivity, increased shareholder value, a more significant market share, and higher-quality technological innovation.



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All of these factors will eventually make up the business plan and how it will be executed. This is the critical, pivotal point of any business, be it in the public or private sector. It is surprising that many business professionals have very little presence in the area of strategy and one wonders why? It is probably because strategic thinkers in any organization are few, and these few are very senior in the organization and tend to be focused on “the big picture”. Their association with others on strategic matters is generally limited to those who have a significant role in determining bottom-line results. This is, of course, the big challenge for us. How do we get into the loop? How can we be seen to be a business winner and be fundamental in contributing to bottom-line results? The first step is to understand strategy fully and to be able to demonstrate how and where actions impact on the real business objectives. The advent of AI in our organizations offers a unique and challenging opportunity. Operating Plan or Business Plan (Level 4) In the organization, this is where the how people reside, those who can put the strategy into action and who know what areas of the business will benefit most from AI. Sometimes it is a wise move to involve these people in the early stages of your strategic thinking to get buy-in and commitment for when implementation will follow. Use of an HR Strategic Schema How to get started? Strategic involvement in HR seems the inevitable development of this critical function. To date, many HR professionals have found increased difficulty in trying to get to grips with current HR strategic models. Most of their design, although well-meaning, are oversimplistic and in the main do not provide the amount of critical information needed to collect and produce high-level strategic information. This tool is focused on providing you with a complete map for not only putting together the HR strategy but also ensuring full integration with the business requirements.

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Before getting to grips with the map, let’s spend a moment looking at timelines for the formulation of HR strategy. There are three timelines we need to be aware of. First, what we can learn from previous experience looking retrospectively at what we have done. The second strategic timeline relates to current issues and information, which needs to be resolved in the future. The third and most crucial timeline is that of the future. It is only the future that we have control of; from a strategic viewpoint, it is the most important. Often this timeline comprises both retrospective and current issues. Most businesses today use a model of some sort to ensure continuity and for putting strategic plans together. As well as using these strategic models, each partner will have a checklist of what to look at and report on for the future in their next strategic plan. The map included here gives a checklist of some of the most critical HR areas to examine and use to see if there needs to be a specific inclusion in your strategic plan for those items. Having worked through the checklist and drawn up the strategic plan, you can see from the map that there is then the strategic mix; HR strategy does not stand on its own. AI will affect every area of every organization. It is part of a far more complicated strategy, as it has to integrate with the corporate strategy of all of the other business partners. It is, therefore, extremely likely and from my experience inevitable that HR strategy will need to be sometimes reworked before it is ready for full integration into the overall business strategy.

Use of an HR Strategic Schema Our HR map, may, at first sight, seem very complicated (Figure 2.4). It is in three parts, Strategic Input, Strategic Output, and Business Plans for Action. All of the business partners input their strategic requirements in the form of PEST, 5 FORCES, and their strategic requirements into the strategic mix. The latter is precise to the strategic partners’ function. On the map, you will notice that we have highlighted the areas that are the specific function of the HR professional. This offers you a great checklist when looking at putting your AI strategy together.

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Figure 2.4  The HR strategic map

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We hope that this will help you with the requirements needed to formulate your HR strategic plan. The specific input for HR into the strategic plan takes the form of the following 10 indicators: What actions are necessary in the future? These 10 subject headings provide a sound basis for an organization’s input needed from HR. The headings provide the initial HR input for the first part of the strategic input. Strategic Input Strategic input consists of all three strategic models, PEST, 5 FORCES and MILLER PEST The PEST analysis is a long-range tool. It is used to identify the following: Political/legal issues Economic Social trends and changes Technology—innovation and change 5 FORCES 5 FORCES tracks the following: Competition among existing firms The threat of new entrants The threat of substitute products or services Bargaining power of customers Bargaining power of suppliers MILLER The MILLER model looks at organizational maturity over time. Organizations grow as productivity increases with time, but this happens up to a point, after which the organization goes into decline. At that point, the organization typically employs too many people, is too procedure-bound, and does not produce enough output.



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The position of the organization or department is found by using a questionnaire that gives a plot on the MILLER curve. Reengineering Process re-engineering is critical to formulate AI and to maximize its benefits. Almost every existing HR process will have to be changed. Every process will need to be re examined to make sure it’s integrated for AI Will the re-engineering impact on any of the following in an organization? People—Will we need to change the number of people we employ to fit the new process? What is the value of the saving if AI is applied? Process—This is the physical process. How we implement the process change and how it will be carried out. What is its value before AI and after? Structure—This is the organizational structure needed to support re-engineering and either people, process or changes brought about by the indicators in the MILLER model. What organization design to you need to transition to? This will defiantly happen within organizations in the near future. Choices of design—either symmetrical, asymmetrical or people-centric. Future Requirements Pay—What pay levels are likely to be in the marketplace? What do we need to do? What are the financial projections? Although there will be fewer, but high-value people, the rates of pay will rocket. Rewards—Are the allowance and benefits scheme competitive, what actions are needed to change? What are the costs and the real value to the individual and the organization? Would rewards be better consolidated into either higher pay or bigger bonus schemes? Are we paying for knowledge or performance? Bonus—projected cost. Is the scheme right for our business - are we getting the productivity we need? If the bonus scheme is to be changed then what is the cost, projected productivity improvement and an indication of our position against our direct competitors.

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Workforce Planning and Trends These need to be predictive trends that will cover factors such as sickness, inclusion, productivity, demographics, skills shortage, turnover, longevity in employment, speed to competency, or organizational shape. The big factor will be workforce reduction, which is likely to commence on or before 2020. Planning Succession—key personnel succession plans, desirable succession plans. Development—trend/cost—speed competence, speed to performance, training needs. Emergency—There needs to be contingency plans for people in an organizational emergency. Involve retired people, universities, and other resources. Relocation—Owing to AI. Trends ­WORKING from HOME—What are the current trends and how they will impact on organizational structure, pay and conditions, and productivity? AI—as described in Chapter 1. It is essential to get to the big picture. AI is best when applied as a holistic tool, not when it is just a bolt-on for bits of processes, no matter how attractive that may look in the immediate future. The biggest challenge will not be with the AI but with employees’ limitations in understanding it. It’s not A.I. I’m worried about its Human Group stupidity. (Howard 2017) UBI—Universal Basic Income referred to at the beginning of this chapter. Performance/Competence and Reliability Task—business performance trends via a Monte Carlo simulation, staff turnover, project approach impact on productivity, initiatives to improve productivity, competent trends projected, competency strengths and weaknesses by the department.



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Individual—competency/performance trends Team—introduction/expansion of teams/team types and productivity-projected gains Alignment Culture—Will the progress with the alignment of the corporate culture template meet the strategic objectives and the final strategic requirements of your AI strategy. Job retention—effects of job retention in the future for critical people, market trends, change in organizational shape, use of talented development techniques, and so on. Job security—techniques needed to give employees security and connectivity with the organization. May include share options, development programs, long-term contracts, and so on. Actions Training—training budget required for future, the anticipated ­investment (ROI) on training, training efficiency relating to productivity, training efficiency relating to competencies and its ­automation, external and internal trends that affect training. This whole process can now be automated (Chapter 5). Please note that it is advisable to train your staff in AI and not to bring in consultants. There are many platforms where you can do this online such as Fast.AI (Howard 2017). Education—educational standards required for the future, need to invest in education and second degrees; the link between educational standards and performance at work. Development—career development needed for the company; internal and external trends in development; development strategies for succession planning within the company. ROI figures for development and effectiveness to be integrated fully with AI.

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Survey Employee—surveys relating to the difference between the current state and future state of corporate culture. Managers—surveys with the managers of the company to check cultural alignment and satisfaction with the working environment in the company; any actions that may be necessary to take for the future. Customers—internal and external

The Strategic Mix The next stage is where the business provides its requirements (Business Partners Input), and during consultative meetings, the HR strategic plan needs to be put into alignment with the overall business requirements and needs to reflect a total picture of what is required. This approach avoids the embarrassment of HR going to the strategic table with no ideas and nothing to offer. It also clearly shows the business that HR is playing the role of a clear strategic thinker and is able to devise and propose strategies that are genuinely strategic. This map has been in existence only for a month, and already HR managers are reporting that other areas of the business are keen to draw up identical maps showing their specific strategic inputs.

Strategic Approval Once the strategic blend has been completed, final plans can be made and submitted for approval. Once approved, the task of turning strategy into action commences.

Strategy Into Action There are many ways this can be done. Using the six S method seems to work best for HR strategic plans. Each HR strategic action will need to be translated into a strategic action plan with what resource and cost. Then, these plans can all be integrated into a comprehensive HR business plan for the short, medium, and long term.



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Constructing HR strategic action plans gives one the perfect tool to upload all of the plans into one integrated process using something like Microsoft Project Manager. The entire strategic plan of the business can then be run and operated as a major project with all the discipline required for a significant project. Speed is needed now. Creativity Specifically referred to twice on the strategic map, creativity needs to excel during strategic planning. The whole process of the strategy gives us a unique opportunity to be creative in the way that would write and carry out our strategic plans. Competitive advantage indeed will not be achieved by copying or following what we have done in the past. AI will demand new thinking. In such a fast-changing world, we should focus our attention very much on improvement, or, what is more exciting, doing things entirely differently. A straightforward idea to follow is the FACE approach not only to internal customers but also to external customers. It is perfect for AI thinking (Miller 2017a). The FACE principle requires us to deliver processes and concepts that meet its requirements. These are as follows: F................................................. A................................................ C............................................... E............................................... Fast, accurate, cheap, and easy. Also, I am reminded of the late Peter Drucker’s advice to always ask the question “Would the roof cave in if we stopped doing this altogether”? Challenging the foregoing processes is the way forward for change, mainly when thinking of what you are trying to achieve with AI. We must make sure as a strategic partner that we do not create processes or activities that significantly take energy away from the business. That means radically re-examining many processes and trying to either abolish them or modify them so as not to take up valuable human capital

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time and effort. Our quest as HR professionals must be to energize and focus the human capital on maximizing its potential and therefore achieving a significant competitive advantage. Active and creative strategic processes are a significant step in the right direction. This strategic map has been produced following many requests from HR professionals around the world (Miller 2017b). It is not intended to be a map that you follow doggedly, but as a guidance to you if you have difficulty in pulling all of the necessary strings together for strategic planning. If you have difficulty in your organization with strategic planning, then other departments may find this process equally of use and you, in turn, can use your professionalism to explain its virtues and the advantage of using such a tool.

Putting Strategy Into Action—Tools Needed The 6 S model Strategy

Shared values

Skills

Style

Staff

Structure

Systems

The framework used here is the Miller/Sporlein model. This was developed by the author and a German Manager and was a significant modification of the McKinsey 7S Framework. In that framework, organizational actions or outcomes were divided into seven categories—each as important as the other. The key to success was ensuring all of the component parts were effectively achieving or contributing to the overall goals. The Miller/Sporlein model (Figure 2.5) suggested that the key driver would always be the strategy, which drives or influences the six subsequent Ss. The framework looks as follows: The “driver”—the “strategy”—is self-explanatory. The other tables used are as follows: Shared Values—This is the culture of the company, the invisible glue of values and beliefs that bind the organization.



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Figure 2.5  The 6 S Process

Skills—The skills needed to carry out any new strategy. These skills may be needed by your staff or may have to be imported via consultants for a special project. Style—The management style needed to ensure that the strategy is implemented. This needs to be in harmony with the requirements of the shared values. Staff—Have you sufficient people, too many, right caliber? and so on Structure—Is the structure of the organization proper to carry out the needs of the strategy? Systems—Will the existing systems (computer) and processes support the requirements that the previous six Ss will demand? From a business professional’s perspective, there are points of focus for compiling a company’s strategy.

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1. Past—Designing strategies to rectify existing problems or shortfalls of a company. 2. Present—Designing strategies that are strategic enablers for others’ strategic ideas. 3. Future—Compiling strategies that are proactive and will provide proactive added value. Whatever the strategic aims, using a framework to explore all the possibilities is a process that will give structure to your thoughts for the strategic plan and the resulting operations plan/budget that is needed. Having used the strategic framework, the ideas can be worked on and the plan produced. The underlying thoughts when producing your input should be “Is this added value?” and “How will I measure the success of my work?” There needs to be a liaison with all the key players when strategic plans are produced. This simple model is worth remembering when doing any of your strategic planning. It is easy to find expensive solutions to everything; the trick is to spend minimum amount, cause minimum disruption, and get maximum effort. Triple W Objective Setting © This system was designed by the author. Recognizing that managers and supervisors did not get SMART objectives, he used knowledge from his strategic mapping process to come up with triple W objective setting. The Basic Concept Most objectives are a result of strategic requirements, and strategy focuses on three main areas—What needs to be done, Why it needs to be done, and finally When it needs to be done. That applied and you get all you need to set very clear and easy-to-understand objectives. The Process The first W is the What, what is it that needs to be done, or what is it that needs doing. This needs to be spelt out so that it is clear to understand. So let’s practice: To improve productivity in the back office by 20 percent this year (that is before the triple W process).



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What Is Required: • To increase the number of case files dealt with by 20 percent a month, that is 50 extra, 600 extra in a year • The work is to be locked into a project program on our Microsoft office management system showing all the deliverable dates and number of extra files processed—the exact numbers to be shown for each month. Why: Without the why, the person doing the objective will never fully understand the context of the objective and why; if the person has this information, he or she may be able to produce a better way of doing it. • For our company to be competitive, we must increase our volume but without incurring any extra costs, such as more workforce. • The timing will be crucial as the sales force has precise targets to achieve and this will directly affect our workload commencing on the 1st October this year. Everyone should be aware that this is a priority as it is a key element of our strategy. Finally, the When: It is critical here to be specific. Don’t just give an end date. Anyone who has managed projects will tell you that that is asking for slippage. So, take time to break the objective into manageable chunks. Dates given should be by day, month, and year. Where figures are involved, try not to use percentages but exact numbers—this will avoid confusion or any misunderstanding. • This objective fits in with the department strategy for continuous improvement and innovation by demonstrating its efficiency improvements over the next 5 years. • The plan for achieving this is required for outline approval by the 2nd April 2015 and must be agreed upon and approved by 1st May 2015 • The first batch increase is needed by 1st October 2015 (50 files), and the total objective is to be completed showing the 600 extra files by 1st October 2016 One of the greatest assists to performance improvement in any business is using this system to ensure that things get done on time and within budget.

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Managers and supervisors only require a short but focused piece of training to be able to do this—remember that there is a vast difference between the managers saying they can do it and the reality of well-written objectives. You may be wondering in the Triple W objective method why there is no explanation of how to do it. With today’s workforce, people are bright enough to work this out themselves or to find out. If they take the objective on board and work out how to do it, then they will be more committed and accountable for the outcome as it is their idea. This simple but effective approach indeed does produce results and more importantly gets a lot more commitment to action. Background to Strategic Action Plans This background is an important document to ensure that projects are well-defined, focused, and most importantly, meets organizational requirements. The strategic action plan states: • • • • •

What is to be achieved What will be covered A plan of how and when each item is to be delivered Risks that might be associated with the delivery Dependencies—whom are you dependent upon to make things happen

An essential aspect of the document is that it is in a standard format and needs approving both before and after delivery ensuring that the end customer or sponsor gets precisely what they are expecting. Each part of the project needs a strategic action plan and each has its strategic action plan project manager. Timing—A first cut of the Strategic Action Plan is to be ready by... Sponsor—The customer/sponsor for each of the Strategic Action Plans (that is you) Methodology—Initially, all concerned will produce their project plans and timelines. Help on construction of the plans can be sought from..............



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When completing the strategic action plan, it is essential to stick to a standard methodology as all strategic action plans will need to be integrated eventually. Front Cover • • • • •

Quality Plan for “project name”. Project Manager Version Version Date Date Approved

(Note: The version numbers should be in decimal points until approval. When this is determined, then it becomes Version 1.) Scope What the plan is going to achieve, what will be covered, and also what is excluded? Deliverables Each project will have many tasks, which together provide the components for the total project. Each manageable task or group of tasks will make up one of the project deliverables. In this section of the Quality Plan, it is essential that all of the deliverables be identified. When you have a team of people working on your project, you will need to assign specific deliverables to the appropriate person. Plan The deliverables need to be translated into timelines so that the Strategic Action Plan can be tracked together with all the other plans and activities during the project. Risks As with any project, there may be risks, which unless addressed will adversely affect either the quality or timeliness of the project. These need to be identified so they can be addressed.

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Dependencies Specific areas of your project will be dependent on other people in the organization helping you. It may be that there is a specific action needed before you can action specific critical tasks—these need to be included in the plan. Sign On The customer/sponsor will sign the strategic action plans collectively. This will happen when he or she is sure that all the elements are in place and that the total plans provide the solution. Sign Off Once the project is complete, the customer/sponsor will sign off the documentation only when all the deliverables have been delivered to the agreed specification. Strategic Action Plan—Example Training needed for new working procedures and software Project Manager: Russ Edell Version.10 Version Date 5-22-15 Date Approved __________ Scope To develop, test, and deliver a training program for new loan counselors, processors, their team leaders, and Finet Direct managers; to create corporate awareness through the training of Finet customer suppliers and their staff (vision only). This Training Program Will be Directed Toward Four Major Product Areas 1. 30/15-year fixed conforming loans (and all other Desktop Originator products).



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2. 30/15-year Federal Housing Administration (FHA) loans 3. 30/15-year Veterans Affairs (VA) loans 4. Equity lines of credit Excluded from this Strategic Action Plan is the training of support personnel. A training program for these positions may be developed at a later time depending on needs yet to be determined. Deliverables The overall objective is to produce a training program that will train existing and new loan counselors, loan processors, and their leaders to staff the best call center in the world. 1. Design and build a training facility with the following attributes: a. 13 workstations—12 for trainees, 1 for the instructor. Workstations will be identical to workstations used in the work place. In the call center, both in hardware and software, but under no circumstances are they to be able to access the call center programs. (Exact specifications to be provided by the Systems Strategic Action Plan.) Also, some of the high-tech items will be required to enhance the training. b. The training facility needs an open area in addition to the workstation area to facilitate noncomputer group training. MIS 7-25-15 2. Record existing loan counselor/customer conversations for review by Performance Advantage. RE 5-23-15 3. Complete a need analysis to define the requirements of some of the training blocks. As of this time, the projected training blocks would be as follows: a. Finet culture and team building b. Relationship selling c. Product knowledge for 30-year fixed conforming loans and all other Desktop Originator Products. d. Telephone usage and predictive language e. Team leadership and coaching techniques f. Putting it all together “One day in the life of a call center”. RE 5-23-15

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4. Complete a need analysis to define the requirements of the software training blocks. As of this time, the projected training blocks would be as follows: a. Use of Point software b. Use of Desktop Originator software c. Use of Loan Prospector software d. Help/script pop-up screen utilization e. Product underwriting guidelines RE 7-12-15 5. Set up Terms of Reference (measurement requirements) (For example) 1. Total calls versus total sales 2. Letters of praise 3. Phone matrix 4. Competency matrix 5. Referrals RE 6-6-15 6. Define Core skills (For example) Point software Desktop Originator software Loan Prospector software Telephone usage and predictive language Accuracy of documentation Product knowledge RE 6-27-15 7. Investigate the use of Brightware software for use in the Service Center. RE 7-3-15 8. Develop a total training program with specific objectives and phases to ensure that, at the completion of training, the loan counselors, loan processors, and their leaders and managers will obtain a basic designated performance level on the basis of the terms of reference and core skills. RE 7-25-15 9. Develop lesson plans and a testing program to cover the content developed in the training program. RE 8-8-15 10. Test the training program in a remedial mode using the existing staff. RE 8-15-15 11. Revise the training program on the basis of feedback received from the existing staff. RE 8-29-15 12. Test the revised training program using the appropriate people. RE 8-21-15



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13. Recruit the first class of 12 trainees. RE 9-4-15 14. Train the first group of potential team leaders. RE 9-19-15 15. Train the first class of 12 trainees with the participation of the team leaders. RE 9-26-15 16. Develop training modules for other product areas, FHA, VA, and equity lines. RE 10-5-15 17. Use portions of the above-mentioned training modules to articulate the vision of Finet to Finet managers, Finet customer suppliers, and their staff. 18. Implement the use of video, CD-ROM, and other high-tech training enhancements. 19. Train other individuals to deliver training when needed. Risks 1. An adequate training facility may not be available, which would significantly reduce training efficiency. 2. Point software may be so primitive and user-unfriendly that it intimidates and discourages the new trainee, making it impossible to achieve the desired goals. 3. Technology group is unable or unwilling to provide the support necessary to set up help/script pop-up screens in the required time frame. 4. Technology group is unable or unwilling to provide the support necessary to set up product underwriting criteria screens in the required time frame. 5. There are not enough qualified potential team leaders. Dependencies 1. Need the technology group to approve specifications and set up the computer portion of the training facility. 2. Need the technology group to design and implement help/script pop-up screens and timing flags (wake-up calls). 3. Need the technology group to design and implement underwriting criteria screens.

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4. Need the technology group to set up a phone system to record existing loan counselor/customer conversations to be used by Performance Advantage in Predictive Language study. 5. Need Performance Advantage to analyze existing loan counselor/ customer conversations using Predictive Language techniques to develop the content for help/script pop-up screens. 6. Need Dr Tony to provide recruitment policy and procedures. 7. Need Dr Tony to provide loan counselor and team leader salary and remuneration policy and procedures. 8. Need Nick to provide content for parts of the training. 9. Need Peggy Ann to develop the content for product underwriting guideline screens. 10. Need Peggy Ann to provide product knowledge information. 11. Need Sara/Dr. Tony to provide Russ with Predictive Language training. 12. Need Dr Tony to provide a cultural template for use in the development of the training program. 13. Need the CEO to provide the vision portion of the training at the beginning of each training session. 14. Need the team leaders to participate in the trainees’ training. Signed for Implementation

________________ Nick Steinmetz VP Sales

Date

Approved by

________________

________________

Jan Hoeffel CEO

Date

________________

________________

Wayne Repich COO

Date

________________ Nick Steinmetz, VP Sales

________________ Date

Approved by Signed for Completion

________________

This Process Works This end-to-end process works. When used by HR, it quickly becomes the norm and adopted by other areas of the business. Displaying the chart (free from the website) provides a signal to all that you have a process that



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is easy to follow and clearly shows the input that HR has as a strategic partner. When actioning strategic plans, the methodology shown in this chapter suits our purposes. Very often we must get things done through others in the organization and those people do not work directly for us; the strategic action plans get everyone on the same page, and the project plan that is made from the 6 S model helps keep everyone on track. Some companies use Strategic Action Plans (SAPS) at appraisal time and get the person being appraised to complete one for each objective they have been set. This produces very good results and gets better commitment from the employee.

CHAPTER 3

How AI and Process Redesign Will Impact on Organizational Structures and Reducing Headcount— Rightsizing Your Organization The History of Traditional Organizations It was in 1760 that Adam Smith set out the ideas that would shape businesses. He made the first symmetrical designs for how an organization should look and designed the first modern organizational structure; it was first used in 1771 by a company called Arkright in Cromford in the United Kingdom. Then, it was adopted by a factory called Smedley in 1784 which is still going—officially known as the world’s oldest factory. Then, the structure was adopted as the model for success by other companies worldwide, and surprisingly this structure for organizations is still very much in evidence today. Smith was also responsible for the new business titles of Supervisor and Manager and for the recommendation that the ideal span of management would be 1:7. This was appropriate in 1760. Despite the technological and education revolution since 1760, there is still a belief that people require close supervision and must be managed. These two factors—old organizational design and 1760 supervision— have condemned us to the productivity and efficiency problems we have

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today. So, why do so many managers and supervisors still want small ratios of control? The reason is that it is less work for them and requires less skill; but it then begs the business question—what do we pay managers for? It is estimated that 95 percent of existing businesses are still structured on the design principles of 1760 and the pioneering work of Adam Smith, that is, in regard to the capability and type of work undertaken (Figure 3.2). This is still the predominate design in the world today as it is easy to do. But AI will decimate this kind of organization as it is so inefficient.

The Current Types of Organizational Design Symmetrical Organizations It was in 1760 that Adam Smith set out the ideas that would shape businesses. He made the first symmetrical designs for how an organization should look and designed the first modern organizational structure (Figure 3.1); it was first used in 1771 (Smith 1776).

1 2

1

1

1

5

10

50

25

100

2500

125

1000

625

10,000

3 4 5 6 7

3125 15,625

Figure 3.1  Symmetrical organizations

Then, this structure was adopted as the model for success by other companies worldwide, and surprisingly this structure for organizations is still very much in evidence today. This design has been subject to some semi changes, delaying and creating the flat structure that is the most widely used (Miller 2014).



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Asymmetrical Organizations The Asymmetrical principle does not stick to the same ratios of supervision, but has different ratios for different levels and parts of the ­business, depending on the role, capability, and type of work undertaken. It is a much better and commonsense approach to organizational design and will always work where the organization employs smart people. It is difficult to pinpoint when this design first became used, but p ­ robably in the late 1960s. The design has many advantages as it allows parts of the organization to have a very flat structure, while other parts are more in line with a Smith-type setup. This type of structure would be well-suited to organizations that decide to phase in AI over 2 to 5 years. The ­organization design could then be adjusted according to the pace of AI implementation. Asymmetrical CEO

Support services Director (1)

Operaons Director (1)

Producon Managers (10)

Packing Managers (5)

Engineering Director (1)

Design team leaders (4)

Figure 3.2  Asymmetrical organization

People-Centric Organizations It is hard to believe that the founders of a people-centric organization were all connected with the IT business and were nearly all scientists or IT engineers. The start of the people-centric organization happened perhaps by chance and was a spin-off of the way William Shockley worked. Shockley was simply a brilliant man. He has been credited with revolutionary work on the transistor and later on advancing semiconductors. Shockley coinvented the transistor, for which he was awarded the 1956 Nobel Prize in Physics.

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Shockley’s attempts to commercialize a new transistor design in the 1950s and 1960s led to California’s “Silicon Valley” becoming a hotbed of electronics innovation. In his later life, Shockley was a professor at Stanford. Thus, over the course of just 20 years, a mere eight of Shockley’s former employees who formed Fairchild semiconductors (named after its financier Sherman Fairchild) in Silicon Valley, California, later gave forth 65 new enterprises, which then went on to do the same. What Shockley had started was a new way of doing things and a new way of running efficient organizations on the basis of a people-centric design (Figure 3.3); whether this was a design formed by analysis or by need we will never know—but the success of Silicon Valley speaks for itself.

People centric Section leader

Section leader

Nominal leader

Section leader

Section leader

Figure 3.3  The people-centric design

The founding companies using this form of organizational design • Shockley Transistors 1950s • Fairchild semiconductors 1957 • Intel 1968—founded by Robert Noyce and Gordon Moore, ­perhaps the first company to offer stock options to all its employees and have the flat organization as we know it today • Microsoft 1981



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• Apple 1997 • Google 1998 • Facebook 2004 (America’s first trillion-dollar company) The people-centric organization is so different and is based on the concept that the organization should be designed and structured to get the best from the type of people it employs instead of designing a typical organization either symmetrical or asymmetrical and making the people fit the organization. If you are wondering if this works, take a look at the stock value of the companies mentioned. The epitome of this design is Google. The organization was created to support those who would work in it—right from the start. The design was specific to meet the personality profile of Technological Engineers. What a change; instead of getting people to fit an organizational design, first deciding what people are needed (by profile) and then creating an entire organization to support that ethos. The design first became apparent in 2001 with the appointment of Eric Smitt as the new CEO. Google has always been good at recruitment (a lesson we should learn from) because they had always valued people with high SAT scores and high grades from the best colleges and universities. You cannot graft on mental horsepower, so it is best to make sure you get it when you recruit. The new Google organization had been created new, different, very functional, and almost free of bureaucratic rules which are endemic in symmetrical organizations—the skeptics, of course, said it would never work—look at the track record of Google. This design innovation was quick to be copied by Apple, although the world at large has failed to capitalize on this type of organizational innovation. The future of organizational design will become a combination of asymmetric and people-centric designers when re-engineering existing organizations will be subjected to a hard time, as all the existing managers will fight the change. The day of the conventional manager being essential to an organization has now reached a plateau. Many managers realize that their days are numbered, and soon their numbers will inevitably decline. When designing the organization or redesigning an existing organization, remember that today people are educated to a very high standard; overmanage them, and you will never see them reach their potential.

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Overmanaged people often find work tedious, and this creates a disconnect between the management and the workforce. This will become very apparent and will work against the organization if for any reason the ­organization has to change quickly. To conclude—be bold with the organizational design, try not to use the past as a benchmark, the most significant strength organizations have is the untapped potential of the employees—use the organizational ­design to capitalize on this. Others were quick to jump on this innovation, including Bill Noyce Intel, Bill Gates Microsoft, the late Steve Jobs, all of whom are what we refer to as Generation X. Later Generation Y liked this design very much, and it became the hallmark design for Silicon Valley companies. Some examples would include Google, Facebook, Air B and B, and Uber. If you were to adopt AI entirely, it would be the perfect design for those in Western countries, in the Middle East, and in the far East. Asymmetric organizations may be the better choice. Dr Tony Miller first coined the phrase “People-centric” at the Balkans HR world summit in 2012.

Ratios It is amazing how little progress was made between 1771 and 1980. During this period there was only a slight improvement in supervisory ratios from 1:7 to 1:8. The significant changes happened in the 1990s. With the worldwide introduction of the Internet, and better school and university education, we suddenly had a far more intelligent workforce. Supervisory ratios throughout the organization started to change, and we started to see companies operating at 1:15, 1:20 and in the late 1990s some companies with ratios of 1:50. A continually improving talented and better-informed workforce makes all of this possible. Gone were the days of getting information only from your line ­manager or supervisor, because the Internet had revolutionized the way that we learn and access information. The World Wide Web provided a learning tool for everybody. Also, the universal use of television widened people’s horizons internationally.



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The world is now (more or less) stable, and the global economy is fully established. The world has become one big supermarket. The breaking down of international barriers to travel has meant we have seen a mass mobilization of workforces on a truly international scale. With such a well-educated international workforce, we must ask the question, have we maximized the organization regarding how people are managed? For the majority of the organizations, the answer must be “No!” This is an area where we must excel if you are looking to get a strategic advantage; then the whole area of how people are supervised and managed needs to change. There is an interesting correlation between intelligence and supervision. Intelligent people seem to need little if any supervision, whereas others seem to be a little better than their forebears back in 1771. The only thought you need give this is if are you dealing with predominantly unintelligent people in the organization; or have you recruited and maximized on getting the best of the best? If the latter is the case, then you have every possibility of making a substantial contribution to improving organizational efficiency and at the same time maximizing employee satisfaction with the work that they do. This choice will be made for you—there will be little room in the AI organization for those who do not produce. As I have indicated before, the manager and that type of role has indeed reached its zenith, and it was in the late 1990s that the inspirational leader replaced the manager. Although these sound like very fancy words, they are two different jobs, both of which can be allocated to a specific time in history. The role of the manager reached it zenith in the late nineties. Since then the real requirement in successful organizations is to recruit and retain leaders at the five critical levels in the organization. To recap, organizational design for company structures will be determined by the amount of AI and process redesign you chose to do. There is also a cultural element when it comes to spans of control—for the people-centric organization in Western cultures and in other parts of the world, the asymmetric design would seem to be better.

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How to Calculate How Many People You Need— Including Rightsizing No matter what your humanitarian view might be, AI and process redesign will mean you need a lot less people. You can agonize over this as much as you like, but it is inevitable. The old way of doing this used to be downsizing. Downsizing is a term used in workforce planning for altering the structure of the organization significantly. It is usually done to both symmetrical and asymmetrical organizations at a period (mid-stage two) in the MILLER organizational maturity chart. Downsizing is a risky business as it involves taking out whole layers of management. Downsizing usually is, but not always, preceded by doing business process re-engineering. The key to successful downsizing is to remove layers of management in the organization by finding out the answer to a straightforward question: Where in the organization is the work done? Although the question sounds simple—it is often not that easy to find in the organization. Every layer is claiming, “This is where the work is done.” Once you have established the truth, then you can go about removing the layers and completely restructuring the organization by delayering. Benefits (UK example) • 28 per cent improvement in productivity • Less management • Improved worker satisfaction scores Rightsizing is now the preferred option. The rightsizing exercise is always interesting to do as it gives you a reality check on the size of the organization. This is essential for AI and should be done before any AI or process re-engineering is done. This gives you an insight as to what’s possible at the start. Rightsizing is quick; often from design to implementation, it can be done in 4 months. Compare this with downsizing, which is done in 1 to 2 years.



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How to Calculate the Rightsize of Any Organization— The Math Involved Step 1 In the organization we are using for an example (a real organization in Europe), we have 3,000 employees. All the work is done every year—so, how many hours are worked? (Miller 2017c) Most CEOs and CFOs will come up with the same answer. Working hours per week 40 × weeks in a year 52 × Number of workers 3,000 = 6,240,000 hours. So, we have an assumption that our 3,000 employees are doing all the work and we pay for them, and it takes 6,240,000 hours. Step 2 To get a more accurate figure, we know that we need to calculate work done by using Prime Working Days formula Prime Working Days (PWD) PWD 226 days × Hours worked per day 8 hours × Number of employees 3,000 = 5,424,000 hours worked. This is a significant difference from our original assumption. Step 3 As in all organizations, there are other lost time variables. In our test company, we find for each employee. Average time lost through sickness 10 days per year Average unauthorized absence 5 days per year Average for training/ conferences 12 days per year TOTAL extra time lost 27 days per year per person Revised PWD 226 – 27 days = 199 days Actual hours worked in our company Days 199 × Hours per day 8 × employees 3,000 = 4,776,000 hours Step 4 As we know, employees are in three categories—poor performers, average performers, and talented.

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We also know from an extensive survey done in 2016 how much work they do. In our organization 17 percent are talented total 510—they work 6.4 hours a day 61 percent are average performers, total 1,830—they work 4 hours a day 22 percent are poor performers, total 660—they work 1 hour a day It is critical for all AI predictive calculations that you know in your organization the percentages of workers in the three categories and how many hours they work in a day. Talented PWD 199 × hours worked per day 6.4 × number of employees 510 = total hours worked 649,536 Average PWD 199 × hours worked per day 4 × number of employees 1,830 = total hours worked 1,456,680 Poor performers PWD 199 × hours worked per day 1 × ­number of employees 660 = total hours worked 131,340 Total hours worked per year 649,536 + 1,456,680 + 131,340 = 2,237,556 Hours Step 5 We now know all the work done in our organization was done by 3,000 employees working 2,237,556 hours, although we are paying them for 6,240,000 hours. The question the management team must address is precisely how many hours a day do you expect your employees to work. In our company, it was decided that all employees should work 7 hours a day. Therefore, if PWD is 226, the final calculation would be as follows: a. 226 Prime working days × 7 hours a day = Hours each employee is expected to work every year 1,582 b. Now, we are going to divide our hours per year for each employee into our actual total hours worked to give the number of employees needed to run our company 2,237,556



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---------- = 1,414 rightsized figure. Actual number currently employed 3,000 1,582 In this exercise we have established that our company can be run using a total of 1,414 employees—this is an absolute minimum. In reality, just over 2,000 people were needed rather than the 3,000 who were currently employed. When it comes to removing people from the organization, the poor performers go first, followed by the lowest performing group of the average performers. It then gets very complicated. Gen X will have the most experience, together with Gen Y, so do you keep the oldest people capitalizing on all the investment you have put in them? This is a route many organizations have taken, redesigning work so they can maximize the older workforce. In 2010 Harvard produced a case study of BMW (Loch et al. 2010) it is a superb example of where the accommodation of older people improved productivity, reduced sickness, and reduced the defect rate in production to zero. The age problem facing organizations is further compounded with what to do with Gen Z, also referred to as iGen. By 2020 they will account for 24 percent of the available workforce (Park Communications 2018)—exactly where do they fit in the new AI process re-engineered organization?

CHAPTER 4

Aligning HR Processes with AI—Productivity Measurement and Performance Appraisal Productivity How to measure productivity and do an appraisal of employee performance? Align all the HR processes with an AI seamless approach, and you will achieve these twin goals. In this chapter, we will look at gathering productivity information and how we best use the performance appraisal tool as a catalyst for productivity, innovation, and change. We will also explore its motivational ability. To look at AI and productivity, we must first understand the three components that make up productivity and how to best use them to our advantage (Figure 4.1). AI needs to link and improve them all, productivity being the first. (Davenport and Ronanki 2018) Performance appraisal interview A.I. Deep learning

Compensation and bonus

Trainingand Evaluation

Business improvement

Succession planning

Figure 4.1  AI and performance appraisal systems

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Figure 4.2  Processes that add to organizational efficiency

Sustainable productivity = Competence + Performance + Reliability Understanding the Ingredients (Figure 4.2)—Competency How to Measure It The topic of accurately measuring and valuing competencies has eluded both line managers and HR personnel for years. The numerous books to explain competency frameworks have done nothing but to add complexity and confusion to what is a straightforward concept. What are the competencies and how are they structured?



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The concept of having a competency framework was to enable organizations to benefit from a uniform approach. Competencies are a key observable behavior. They are critical words in that short statement— the first is key when allocating competencies to a job the focus needs to be on the key competencies. The first and most dramatic mistake organizations make is to allocate as many competencies as possible to cover every single item of work. By so doing, it makes the task of measurement unattainable. But, if organizations are practical and focus on what competencies are critical or key to a particular job, then the task of measurement and doing training needs analysis become attainable and realistic. The second important word in the definition of competencies is ­behavior. We can see, measure, and improve behaviors as they consist of skills, knowledge, and experience. Having a proper competency framework provides organizations with three essential outcomes. Competencies provide us with • quality assurance • conformance to standards • doing things in a safe and legal way. Without such standards, it is easy to see how mismanagement seeds economic downturns. The economic downturn a few years ago is a classic example. The abuse and misunderstanding of how competencies work has meant that in many organizations their overcomplicated approach has significantly reduced productivity. In an attempt to rectify this, we have set out from scratch how competency frameworks should work as they can be a positive contributor to productivity and more importantly have credibility with the business users. Regardless of what approach you take or which model you use, simplicity and clarity of approach are essential if you are to maximize your investment in your employees. To get the most from a competency approach, managers need to fully understand how competencies work and why they are essential.

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From practical experience, it comes down to each employee having no more than eight competencies, with six being the average. Key competencies are the ones that make the difference. To make this clear, there is a complete worked example. The first is an illustration of how a team leader competency is constructed. The smallest elements are seldom individually rated, and training for these parts typically occurs on the job. The competency unit is of key interest as this is what we measure and provide training for as need arises. The all-important units and their relationship to the competence. The organizational requirement of competence is essential from the viewpoint of a training needs analysis. Although competence impacts every individual, the requirement for competence has already been scoped, approved, and funded at the corporate level. Therefore, although competencies appear to be an individual training need, they are indeed part of the organizational requirement that guarantees and gives conformance to organizational standards. From a training needs analysis point of view, competencies are challenging, especially when they do not quite match a training course or a packaged solution. Identifying the appropriate training to achieve a higher level of competency is subject to broad interpretation. Before embarking on an exploration of training needs, minimum and maximum standards need to be set for the competency framework within your organization. Although it is unlikely that you know, right off, the minimum, average, and maximum competency levels required in your organization, these data are essential when you conduct your training needs analysis. For example, if the minimum competency level is 50 percent, the average competency is 70 percent, and the maximum competency is 85 percent, then you can identify the priority for the training needs analysis resulting from the competency level of the individual. This is typically recorded at performance appraisal, which is discussed later. Let’s look at the example (Figure 4.3). The competency is a team leader. Each page is a unit. You will soon see how this fits in with the schema.



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Team Leader Elements

Units

COM PETENCY TEAM LEADER

Delivering results and Quality Analysis and problem solving Communicating and influencing Leadership

Figure 4.3  How competencies are structured

Competencies Competency Unit

Definition

Anchor

Delivering Results and Quality

Directing effort to the achievement of objectives

Ensures satisfactory team delivery of defined goals, overcoming most problems within one’s own area of specialization

Analysis and Problem-Solving

Analyzing information effectively and drawing sound conclusions

Evaluates available information, reaching decisions on the basis of key facts and practicality of solutions

Communicating and Influencing

Achieving understanding or gaining acceptance of ideas and proposed action

Prepares the case fully, stressing the benefits to be gained and inspiring confidence in one’s own views

Leadership

Getting the best from others

Monitors progress toward achieving clearly defined shared objectives, provides feedback, support, and encouragement to individuals on specific tasks

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Unit One—Delivering Results and Quality Definition: Directing effort to the achievement of objectives Anchor: Ensures satisfactory team delivery of defined goals, overcoming most problems within one’s own area of specialization Positive Indicators—Elements Negative Indicators • Monitors progress of individuals against their targets; encourages achievement • Tackles bottlenecks/backlogs in the system, and looks for ways to clear these quickly • Refers issues upward quickly to get action • Continually reassesses priorities to focus energy most productively • Consults external specialists to resolve problems outside one’s own specialist area rapidly • Gets “all hands to the pumps” • when dealing with priority, or • “emergency” situations • Adopts a flexible approach to work; is prepared to commit extra effort whenever necessary • Takes immediate action to rectify slippages

• Does not monitor progress against clear targets • Delays taking decisions until forced to do so • Avoids taking responsibility for one’s own work and that of others • Turns immediately to others for help in resolving situations; does not persist in trying to resolve problems • Fails to respond immediately to slippages within the project • Delivers work that will need amendment or further effort later on • Pursues avenues of interest not set as a priority • Repeatedly finds reasons why tasks could not be completed on time or to the desired quality

Unit Two—Analysis and Problem-Solving Definition: Analyzing information effectively and drawing sound conclusions Anchor: Evaluates available information, reaching decisions on the basis of key facts and practical solutions Positive Indicators—Elements Negative Indicators • Utilizes past experience to make standard checks on the reliability of information • Gains as much information as possible from a variety of sources on which to base a decision • Always seeks out facts rather than make assumptions or guess • Considers the trade-off of risk versus gain when coming to conclusions

• Takes information at face value; does not cross-check facts • Pays attention only to those facts that suit one’s own position or preferred course of action or interpretation • Makes decisions on the basis of subjective opinion or hearsay; doesn’t investigate the situation oneself



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Positive Indicators—Elements

Negative Indicators

• Bases decisions upon statutory codes of practice where they exist • Bases solutions on the objective facts, not on subjective opinion • Considers full implications and benefits of recommendations for the company • Devises objective business case to support recommended changes to procedures that have caused complaints and subjective criticism

• Values speed of decision making far above careful deliberation even when the time is available

Unit Three—Communicating and Influencing Definition: Achieving understanding or gaining acceptance of ideas and proposed action Anchor: Prepares carefully, stressing the benefits to be gained and inspiring confidence in one’s own views Positive Indicators—Elements

Negative Indicators

• Prepares facts in advance of meetings • Considers full impact of proposals before putting them forward for consideration • Talks in a positive manner to inspire confidence • Anticipates likely questions and prepares counterarguments • Keeps the message simple; states the facts and objectives • If unsure of the details, commits to finding out for the next meeting • Answers questions directly • Clarifies the needs of other parties in meetings • Persists in putting forward argument • Uses graphics in a presentation where possible • Explains the logic behind changes

• Delivers an unstructured argument • Makes up arguments when one’s own case is questioned • Presents in a flat and monotone fashion • Gives way quickly when others raise counterarguments • Loses interest if an agreement is not forthcoming • Uses jargon or technical terms others may not understand • Loses patience with those who do not appear to understand the argument put forward

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Unit Four—Leadership Definition: Getting the best from others Anchor: Monitors team morale, provides feedback, support and encouragement to individuals on achieving objectives • Sets realistic but challenging goals by breaking down overall targets/objectives • Makes time available to staff to share expertise/knowledge • Conducts regular meetings to review individuals’ performance • Conducts quarterly appraisal meetings that focus on development and potential for progression against objectives • Gives negative feedback in private; points out implications of the approach taken • Conducts regular team meetings to communicate information/review team progress and team goals and to praise successes and build team spirit • Identifies training needs of staff and supports with training opportunities • Regulates the workload of staff; doesn’t overburden them • Gives staff clear instructions as to what is required on tasks, and to what standard • Ensures team members are fully briefed on task plans and the background • Provides constructive feedback to help individuals overcome problems or improve their performance • Understands what motivates individual members of staff, e.g., pay, career progression

• Maintains distance from staff • Works on an “us” and “them” basis • Is destructive when giving staff negative feedback; uses authoritarian approach, is sarcastic or punitive in making comments • Does not communicate successes to the team • Does not make time available to staff • Fails to praise work well done; takes the excellent performance of staff for granted • Expects others to be motivated as a matter of course; does not make active attempts to motivate the team • Adopts a controlling approach; does not encourage staff to take ownership of their work • Offers no support for personal development

Measuring Competency Levels and Getting the Best from Training What’s the competitive advantage of this approach, for example, ­focusing on measuring only units? First, we need to be realistic about setting ­organizational competency standards in line with the key competencies. In Figure 4.4, the minimum competency standard is set at 50 percent (Miller 2017b)



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Competency Maximum standard 85%

Company required ave. 70% Minimum standard 50%

Figure 4.4  Setting competency standards

In other words, management should not recruit anyone below this minimum requirement. The company standard is shown at 70 percent (Figure 4.4). Any employee falling below that competency score should automatically get training. Once an employee reaches 70 percent (depending on the job), then he or she is said to have attained the required employment standard. As 90 percent of all training will come from these data, training needs can now be automated into our AI system. The software now exists to do this, and both competence and performance can be accurately recorded and translated into precise training needs. This will save time and, of course, cost. Key points about competencies: • Competence guarantees quality, safety, and conformance to standards. A lack of competency standards in organizations undoubtedly contributed to many of the financial failures. • Measure what matters—the units from critical competencies only. • Set up standards—minimum, company standard, and top-end competency scores. This will clarify your organization’s competency levels, strengths, and weaknesses. To make this a success, you need to involve all of the senior

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managers to get not only the buy-in from them but also a good understanding of how the competency system works.

How to Measure and Automate Performance Data Performance is raw output, how much we do. Performance is measured in many ways, including the following: • • • • •

Speed Time Efficiency Unit cost Volume

Most companies are overstaffed by 15 to 20 percent and, of course, by a much higher percentage in the public sector. Published figures in late 2009 by the UK government showed that there were 50 percent too many people in the public sector, and specifically in the Public Health Service. It was reported by McKenzie consulting in September 2009 that 1 in 10 employees in the health service could be dispensed with. In a survey of public sector employees in September 2009, 89 percent felt that budgets and public spending were managed inefficiently. What kind of performance is expected should be made very clear in the contract of employment, although companies should seek legal counsel in this regard as employment law statutes vary geographically on this issue. On the other hand, performance levels above those required should be locked into a bonus or reward system. If the original criteria are correctly set, it should be difficult for employees to do more in the same time, since in theory, they are working at their optimal level. So, you will need to make the decision—bonus or overtime—but not both. Performance expectations (above required performance) should be established during the performance appraisal and updated throughout the year. Measuring of Performance can be done in three different ways; these are approached depending on the type of business you work in, the country you are employed in, and finally the culture of the company or organization that you are part of.



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1. Performance measured by time worked. This works well if you have managers who do manage. Also, certain cultures are very work focused and when they are at work—work hard. This mainly applies to China where hard work by the hour is part of the culture. In 2016 a survey was carried out in the Middle East to determine how many hours people worked. The following results were obtained: Talented workers—17 percent worked 32 hours a week Average worker—61 percent worked 22 hours a week Poor performers—22 percent worked 5 hours a week I have displayed these data in many (non-Asian) countries, and very few people seem surprised about the results, particularly those in the public sector. 2. Performance through individual target setting. This is a real winner, but it carries with it a big warning. Properly set and monitored targets with big bonuses produce massive results, provided a. that at the end of the year, the bonuses are not subjected to a forced ranking. b. that the bonus must be subjected to the average competence and reliability scores being achieved. c. that the bonus is directly aligned with organizational achievement. 3. Performance through team target setting. This has very much the same criteria as the aforementioned, but uses a Hopper Bonus scheme where all participants (The Team) need to meet the score requirement for competence and reliability before any bonus can be earned. Companies that take their eyes off of this soon find themselves in real financial difficulty. There are three approaches to get performance; each has its advantages and disadvantages. The first is self-motivated staff—these employees are painstakingly recruited and know what needs to be done. They require little motivation or supervision and work whatever hours are needed. They are typically rewarded via some form of share/stock option scheme. The second is the managed workforce—employed but not trusted. Management runs a strict and inflexible routine. In this instance performance is achieved by hours worked, the manager taking responsibility for prescribing work and making sure it is done within the time allocated. The third and most abused is the setting of objectives and stretch targets. The old-style managers are not good at doing this and are constantly

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undermined by having forced ranked bonus schemes determining who gets what bonus at the end of the year. A consistent theme in performance—it must be measured. Regardless of which of the three schemes you use, the approach for measurement is the same as for competency. Management needs to set minimum company standards and top-end figures for performance. As with competency (quality), no bonus or additional payments should be made for anything below required average standard. In fact, if required performance is not achieved, then employees’ basic salaries ought to be reduced. Check this out carefully as it may not be legally possible, although I think it is morally right. All of this highlights the need for adopting thorough recruitment practices; for getting guidance on this, look at how good Google are at this—and look at their bottom-line performance figures. You may be wondering why productivity is not 100 percent on our chart. Well, two very separate components affect this. The first is time. In a 38-hour week—no one can work 38 hours—we have PT&C time plus a lunch break. So at best the working week will be only 34 hours of available time. Poor overall performance is then compensated for by the managers who demand more staff, resulting in overstaffed organizations. Gathering performance data is, of course, done at performance appraisal. We use the same process that we do for competency information shown in Figure 4.5. Performance – pre set standards Maximum standard 80% Ave. 75%

Minimum standard 60%

Figure 4.5  Setting performance standards

Now what’s important is that both competency and performance are now on linear scales 1 to 100 perfect for AI to pick up at a later date.



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Reliability—What Is It? How to Measure and Improve It Reliability is a dimension of value that is very rarely measured by workforce management. So, what is reliability and why should we take it seriously? We already know the costs of an employee and what that cost is per day. We also know the cost of an employee per hour. Reliability is a measurement of whether or not that person works for the hours that he or she is paid. Unreliable people tend to commence work late, often leave early, and have a remarkably high level of unsubstantiated sick leave. The two critical areas for us to focus on are sickness and unsubstantiated days off (either from uncertified sickness or other reasons). The terminology makes this authorised or un authorised absenteeism but the global tile used is reliability. Why we need to get on top of this issue is that it cost lots of money directly and hurts employee morale indirectly. That is why measuring reliability is increasingly an essential factor in workforce management and reporting the cost of unreliable people is a significant business cost factor. When a public organization in the United Kingdom was investigated, it was found that employees were shown to have had 895,000 days off (was this sick leave?). With 50,000 employees, that equates to each employee having 17.9 days off on average every year. Fortunately, mathematically it is now possible to calculate by individual, section, or department the direct cost of reliability. This can also be projected using our predictive workforce management tools showing the cost over 5, 10, and 15 years. For all organizations this figure is so significant it cannot be ignored. For example, if one person comes to work late every day (just 30 ­minutes) and has 14 uncertified sick days in a year, then what is the cost in reliability for this employee for 1 year? £46 × 0.5 × 0.226 = £5,198 £46 × 8 × 14 = £5,152 Total cost = £10,350

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If 20 percent of our 3,000 strong workforce fall into this category, then the real cost per year is 600 × £10,350 = £6,210,000 So, for our three-time scales of 5, 10, and 15 years, that is: 5 × £6210,000 = £31,050,000 10 × £6210,000 = £62,100,000 15 × £6210,000 = £93,150,000 From work on reliability carried out over many years, these are very conservative figures. If this does not grab your attention, then do the calculation on the basis of A City Councils figures: 17.9 days off each year for each of the 50,000 people. An AI system would never have allowed this to occur; there is a lot to be said for automated processes. Measurement of reliability − new tools = great results When gathering data, we use formula 2 and then the figures are converted into a linear scale (Figure 4.6), so that we can correlate them for other comparative work. Using your facts you can now do a benchmark to find out how reliable your employees are and what’s the cost to the organization. It’s management’s job to rectify the fault if you have a big issue here—not yours. You have identified the problem, costed it out, and provided the management information on the cost to the organization. Ongoing monitoring will make this a key human capital measurement factor. It would be prudent to come up with a figure of where you expect the organization to be on the chart—100 percent is not realistic. Thus in 2017, using an existing but old formula (the Bradford formula), we have mathematically adjusted the output, so that the output



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Figure 4.6  0-to-100 scale set against Bradford formula scores

runs on a 0-to-100 scale, with the indicators showing when counseling is needed, when a first verbal warning is given, when a first written warning is given, when the next written warning is given, and when a final written warning and dismissal is given. AI will, of course, do this automatically. Reliability, with competence measurement and productivity measurement can now be measured as one integrated system, AI will integrate and report on the results. The data are fed into this program and the appropriate actions to be taken are displayed to the manager, so that there can be no oversight, slippage, or forgetfulness to take action. As I mentioned before, reliability is one of three key indicators, which together equal productivity. It is essential that any decisions on

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increments, bonus, allowances, or promotion be taken only after viewing the total picture. Very often reliability is not taken into account during interviews or for selection and promotion. Poor reliability has a marked effect on other employees’ motivation to such an extent that it severely impacts on organizational efficiency if it is left unchecked. The value of time and people—essential calculations and information The cost of poor reliability is enormous not only in straight financial terms, for example, in the matter of paying an employee’s salary, but also in regard to missed deadlines, slippages, and low-quality work. Therefore, I am sure you can see that reliability is a crucial indicator and essential for our dashboard. Can poor reliability be identified? Significant evidence exists that likely poor reliability can be shown using personality profilers. Other research has been carried out in regard to the impact of job satisfaction and absenteeism on an employee, and there seems to be clear evidence of positive correlations between high-frequency absenteeism (many short absences from work) and dissatisfaction in the job. This further shows the importance of doing regular staff satisfaction surveys to ensure and measure the relationship between absenteeism and the staff satisfaction scale. This is so important that it features on our dashboard productivity indicator scale. Projections of lost time through poor reliability Using formula 2 (referred to in Chapter 9) and the appropriate software, it is possible to get a linear numeric score (0 to 100) that shows reliability. Then by modeling the data using a Monte Carlo–type simulator, you can project the reliability factor 5 to 10 years into the future and also what the financial costs will be to the organization. As we have seen before, we now have the data on a 1-to-100 scale, which is perfect for our transition to AI (Figure 4.7).

Aligning Performance Appraisal for Future Needs with AI and Other HR Processes Ask any professional HR manager about the benefits of performance appraisal and you will hear all the normal attributes—a good development



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Figure 4.7  The productivity components

tool, essential to determine training requirements, a vital tool for motivation, ideal for gathering data, for setting performance objectives, and for measuring employee competence, and a tool to justify bonus and rewards, and so on. The final comment is generally that it is best practice. Ask the same question to a senior line manager, and the response will usually be very different. The majority of managers seem to have the view that appraisal time does not justify the result. This is a conflict of opinion, and so who is responsible for the output and added value of the appraisal system? Who has responsibility for the performance appraisal? If you decouple measurable output from performance appraisal, then most HR professionals will put their hands up to owning the process. However, once the term measurement output is mentioned, then the responsibility for the process and the output seems to transfer quickly to line management.

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With performance appraisal being the single most significant tool for objective setting and performance measurement, how can it degenerate so quickly into an organizational orphan? In the vast number of performance appraisal systems that are in place, it is inconceivable that so much can be spent on a process that delivers so little yet is still viewed as best HR practice. This is due to a common myth that best practice must always produce best practice results. If it is best HR practice, then perhaps any HR bonus should be calculated on added value measurable output from the system. As the process is a shared responsibility with the line management, the output must form the basis of a shared key performance indicator. Before you sign up to this being a good idea, you need to read on and see what is involved in getting benefit from this system. Severe defect in most appraisal systems The operating fault of most current systems lies not just with the process and lack of accountability for bottom-line results but with a far simpler issue, an issue that is cheap, quick, and easy to remedy. After speaking with over 1,000 HR professionals worldwide from a broad spectrum of industries, it became evident to me that in the majority of cases the focus on appraisal makes positive, measurable outcomes impossible. The consensus seems to be that once the appraisal system is installed, after the first year a pattern of how the appraisal runs becomes evident. The actual time spent doing the appraisal seems to vary to within plus or minus 15 minutes, the mean tending to be 1 hour in duration. What is of great interest is how that time is used. It seems that the majority of the appraisal time is spent reviewing the previous year activities. In fact, the figure quoted amounts to a massive 80 percent, that is, 80 percent of the time is spent on looking back on performance against objectives and identifying training needs and other factors that should not be discussed at a performance appraisal. We term this the rearview mirror effect (Miller 2017a). The fault with this approach is that nothing can be done about the past or past performance—what’s past is history, nothing will change what’s already happened.



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The only thing managers can plan for and be successful with is the future. This obsession with the previous year’s performance and activities is the single biggest reason for the failure of appraisals. Therefore, the rearview mirror approach is not compatible with today’s fast-moving dynamic business approach. Such a strong past focus leaves only 20 percent of the appraisal time for future focus. It is, therefore, not surprising that objectives are poorly set and little, if any, real measurement of performance is planned or takes place. Because of this, managers are unwittingly setting their staff up for failure. This effect of setting employees up for failure is genuine and costly. Training is then identified on the basis of failure or weaknesses. When an employee fails, the feeling of failure, or of a job not well done, pushes motivation down and hangs like a shadow of doom till the next appraisal, so training (usually the cure-all solution) is prescribed on the basis of a failure that happens probably 9 months before the appraisal. Training then identified at appraisal goes through the system, and it can be 6 months before it takes place. To recap, in this example, a total of 15 months elapsed time has been taken to rectify a past mistake or shortfall and provide a solution, in this case, training. This retrospective approach to appraisal makes no business sense and could easily be avoided by taking a different approach. HR managers, line managers, and indeed managing directors, seem to be unaware of the real cost of an appraisal system. If the appraisal is the most critical goal-setting tool an organization has, then we must be confident that it will yield a good return on investment and add value. So, let’s examine the cost of an appraisal for a company employing 5,000 people with an average employee unit cost of £46.00 per hour. For each appraisal Appraiser’s time preparing 0.5 hrs × £46 Appraisee’s time preparing 0.5 hrs × £46 Appraisal time for appraiser 1 × £46 Appraisal time appraisee 1 × £46

£23.00 £23.00 £46.00 £46.00

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After the appraisal—completing documentation £23.00 appraise 0.5 hrs × £46 After the appraisal—talking and reflecting £23.00 appraise 0.5 hrs × £46 HR processing time for each £23.00 appraisal 5 hrs × £46 Subtotal £207.00 3,000 employees × £207 £621,000.00 Also, it would be fair to add the cost of misdirected training identified from appraisal. This could be as high as 70 percent of the training budget, the cost of which would need to be added to the calculation. In our example, we have a cost to the business of £621,000—to get just a simple return on investment, we need to get every year £621,000 of measurable bottom-line benefits. Can your appraisal system deliver this type of performance? If you go beyond return on investment to seek added value, then it would be reasonable to expect to see a 20 percent added value every year. In other words, every year the system is in place we should expect to see minimum measurable benefits of £745,200. Can your system deliver this type of business performance? What needs to change to produce real advantage from performance appraisal? Producing real results from appraisal, be it development, competency improvement, or business performance, is achievable by merely changing the focus and emphasis of any traditional appraisal system. The only thought any manager should have at appraisal is “How can I set this person up to be successful?” With that thought clearly in mind, the rest should be straightforward and fully managed by AI. Time reviewing the past (which we cannot change) should be reduced to 20 percent of the appraisal time—looking forward, setting SMART or WWW objectives, and discussing success should be our prime and only focus. At least 80 percent of focused attention must be for success in the future. If for any genuine reason an employee (appraise) is unable to meet an objective because of a lack of skill, knowledge, or experience, then some



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form of action, perhaps training, needs to be arranged before the date of the start of the objective. This is a critical step that needs to be taken if an employee is to be successful—training first before meeting an objective. New focus = new results. Once objectives have been set and agreed, the measurement of results must be an ongoing, a regular, and a scheduled activity—after all, is this not the basis of why we employ managers? This measurement must take the form of an ongoing and performance-focused interaction between appraise and appraiser. The focus on everyone being successful should be the manager’s overriding aim. This is not easy with difficult and challenging employees, the lazy, and the unengaged. A good manager should apply the same technique to everyone—change will happen only when trust and credibility have been established (Miller 2017a).

Is Appraisal a Motivational Tool? Is appraisal a motivational tool? Just ask yourself, will employees be more motivated by failure—the old rear mirror approach; or will employees be more motivated by success in an environment that breeds success; the forward success-driven approach. Motivational success through appraisal can be measured. Do some statistical analysis such as measuring sickness levels before adopting the new approach and then examining the sickness levels after. Also, look at staff turnover both before the adoption of the new system and after. Staff satisfaction surveys are also a useful indicator. Where does 360-degree appraisal fit with the new model? Three hundred and sixty-degree appraisal is yet another shining example of what is believed to be best practice. Does it work? How much does it cost to run the process? Is it going to be of any use in the AI world? The term motivation is often wrapped in with the benefits of appraisal. If the appraisal is an essential motivational tool, then managers need help to get the new approach right.

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Performance against agreed targets needs to be measured and discussed throughout the year, with success celebrated as appropriate. Then, when the next round of appraisals starts, the majority of employees will be confident in the knowledge that you are focusing on making them successful. Success breeds success. Most managers have difficulty with setting measurable performance targets. Although this is a vital part of the job, it is seldom tackled with much enthusiasm. Short workshops on setting specific objectives are an excellent way to start, using the SMART process to help them focus. Another good investment would be a briefing on the value of coaching and using Management by Walking About, which is an excellent tool to keep ongoing involvement in place. A key input factor for managers’ and supervisors’ bonuses should be based on the percentage of performance achieved during the year. By linking directly to pay, the incentive is created to make things happen. Organizational Benefits Changing the focus for appraisal is a case of everything to gain and little to lose. In AI terms, performance appraisal correctly focused is the hub for most HR activities. Some of the organizational benefits that should be seen include projects delivered on time and within budget, reduced absenteeism levels, improved staff morale, reduced training budget, a more agile organization, and lower staff turnover in the long term. The process will clearly identify poor performing managers, supervisors, and employees, and will enable a definite and measurable impact on the bottom-line to be seen. Although this might seem appropriate only to the private sector, many of the benefits mentioned do map very nicely into the public sector. There should also be a change in the way HR is viewed, as this gives a clear indicator that HR is adding value by using business skills to enhance business performance.



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Individual Benefits Connectivity has become an issue in the United Kingdom, with surveys showing that staff increasingly have low connectivity with their employers. As the new appraisal focus is based on shared responsibility for success, there will be a greater feeling of inclusion and the possibility for building long-term connectivity. Rewards based on measurable performance are also fair and equitable and will be seen as such. Those showing potential through improved performance will be the first candidates for development, training must take on a new and specific role that is directly linked to achieving business objectives, which is a prerequisite for talented people. Finally, there will be an overall view that we are doing the right thing and something that is worth doing—because it is measurable and taken seriously.

The AI Impact AI can run almost all of this process. The two critical requirements for productivity coming out of Appraisal are Performance scores and Competency scores. The former is the main feed into an AI-run bonus scheme (discussed later in Chapter 7). Competencies determine training needs allowing Training Needs Analysis to be fully automated (Chapter 5). AI will also be able to manage continuity of the process and will adjust any rouge scores. These scores are like to come from appraisal where the manager gives higher scores for favored employees or training courses as a reward. Doing this seems very simple and it is. What AI will significantly add is much tighter control of the process and intrinsically link this process directly with training, evaluation, calculation of Return on Investment, and pay and compensation. Many HR functions have some of these data, but I have yet to see it work seamlessly. It is a perfect fit for process redesign and for using AI. Often a missing link will show if a performance appraisal adds value (Figure 4.8). This would be a smooth operation for AI, and the flow of useful management information would be truly beneficial.

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Performance appraisal interview A.I. Deep learning

Compensation and bonus

Trainingand Evaluation

Business improvement

Succession planning

Figure 4.8  The appraisal big picture

Is performance appraisal a motivational tool—sickness levels are a good indicator of staff happiness and motivated staff—the correlation would also be managed seamlessly by AI.

CHAPTER 5

Automating Training Needs Analysis and Training Evaluation Training Needs Analysis—The Old Way. You Could Not Make It More Complicated if You Tried!! Uncover Performance Gaps Gaps in performance are sometimes referred to as front-end analysis. But since the advent of competency frameworks, nearly all of these old processes are now redundant, along with the use of Fish Bone Diagrams, meta-analysis for training, and DIF analysis (difficulty, importance, frequency). When to Conduct a Training Needs Analysis—The Old Approach Proceed with a training needs analysis (TNA) if you have identified that one of the root causes of an existing performance gap stems from a performer’s lack of knowledge and/or skill. After all, if performers don’t know or understand a concept, they have to be educated. The identification of this root cause calls for an education or training solution, and TNA is the first step to get you there. A TNA itself is a conglomeration of multiple subanalyses; which ones you will need to conduct will vary by situation and the amount of prior knowledge you have. Subanalyses may include the following:

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Audience Analysis—an examination of the target audience characteristics, such as geographic location, prior knowledge, existing skill set, age, interests, and so on. Job Analysis—the breakdown of a specific job function into its ­respective duties and tasks, as well as required skills, knowledge, and competencies. Task Analysis—the breakdown of individual tasks into their respective steps, required tools/inputs, and timing. Content Analysis—a thorough review of any material, resources, and input from subject matter experts about what is included in the training. Environment Analysis—a close look at the work environment that will help determine what can and should be replicated in the learning setting. Media Analysis—a determination of what delivery media make sense given the content, audience, and design constraints. Cost–Benefit Analysis—an analysis of the return on investment (ROI) expected from the training.

Automating all Training Needs Analysis for  Competency-based Training We have already discussed this issue in Chapter 4. You would need to do some process redesign before you start applying AI. The concept is to automate TNA and training evaluation fully. This process has dumbfounded training departments for decades; even now most training functions take a long time to do TNA, and their best attempt at evaluation has been to use the Kirkpatrick model designed in 1954 (Miller and Brelade 1997). The organization needs to set standards for the minimum, average levels required in it. This sets the parameters for scoring competencies. In Figure 5.1, we can see that the organization has set a minimum standard and an average. This is quite common, but this needs to be decided for your specific organization. Once the standards have been set, the line manager will award scores for each competency on a 1-to-100 scale during the performance appraisal. This is easy to do, as the line manager is the only person who

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Competency Maximum standard 85%

Company required ave. 70% Minimum standard 50%

Figure 5.1  Competency approach—New method

observes the behavior of employees throughout the year. The definition of a competency is A key observable behavior. Once the score is allocated, if the number falls below 70 percent, it will automatically indicate that training is needed (whatever method you use). The process is then fully automated; a request is generated and then auctioned. It’s so straightforward—no need for consultation, discussion—fix the training, which is in line with that competency. The amount of work that this will save in the area of training functions is massive. Also, as you will know the unit costs for the four categories of training (AI will do this), you have an exact record of cumulative expenditure. Likewise, if the training is for the next financial year, the system will automatically be able to build the budget.

Fully Automating Training Evaluation for Competency-based Training The line manager will, of course, do an evaluation. This is the only person who observes the employee on a day-to-day basis, and will be able to see improvement. At the next appraisal, the amended score is entered for a particular competency. The ROI will be automatically calculated as it is based on the difference in scores.

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For example, if an employee was identified as having a score of 60 percent in the area of decision making, he or she would automatically go for training on decision making. The course content would already be included in the competency specification, so AI would merely cross-reference and fit the person to an appropriate course. Then later in the year during performance appraisal, the manager would enter the new score. Let’s say the score is 71 percent; the difference will be calculated automatically and a financial benefit produced (ROI). Every year one will be able to see how much total financial value the training function has added to the organization. It is modern technology that has made this possible.

What to Do with Performance Training? Between 95 and 98 percent of all training in the West and the M ­ iddle East is competency based. Out of this percentage, not much is performance-based training. Performance based training is all about output: where the output is doing more, or doing the same work but for less cost. There are only about thirteen performance-based courses I can recall (Figure 5.2), and these at the moment need a proper TNA and preevaluation before training takes place. What competency-based training should do is that it must add significant financial value. At the moment this type of training is always manually evaluated AI will be able to do competency-based training in its entirety as part of the integrated training process (Figure 5.3).

Performance-based training • Managing projects to deliver ahead of target and within budget • Predictive workforce planning • Re-negotiating existing contracts • Train the trainer—to achieve more training in-house • NLP for sales staff • Converting cost centers to profit centers • Setting and managing performance targets • Innovation thinking to reduce operating costs * Commitment budgeting to deliver agreed budgets within or under budget

Figure 5.2  Performance-based training

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Figure 5.3  Process map before AI

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Bonus for training functions can be very quickly linked to how much ROI these functions generate every year. AI would also be able to rank vendors of training on the basis of the ROI of the training they deliver, moving away from the concept that if the delegates like the trainer, then the course must be right. There will also have to be significant amendments in how training is provided mainly for Generation Z or iGen. Z or iGen (Miller 2018). The Changing Face of Training. White paper Google Scholar it is unlikely that the traditional classroom lecture–type training will be suitable for this group as it will make up 24 percent of the available working population by 2020. (Workforce (2017) Will Millennial’s and Gen Z Rule the Workforce by 2020?)

CHAPTER 6

Digital Footprints and How They Can be Used to Upgrade Recruitment and Succession Planning—The End of Testing? Existing Recruitment Processes—Upgraded The process approach to interviewing has been well established as a very successful tool (Figure 6.1) for organizations for use either in the public or in the private sectors (Miller 2017d; Budnick, Kowal, and Santuzzi 2015).

Figure 6.1  Professional recruitment process

A process approach helps avoid most of our problem areas and also the underlying issue that managers, in the main, recruit only people they like. That like is often made up of the most amazing preconceived ideas that would not survive any rational audit. The process approach is a way of having a standardized format across the organization and ensuring conformance to standards.

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The process approach may need to be modified to fit individual, organizational needs, and that is your choice. The process consists of nine sequential steps—each essential to the whole objective of recruiting talented people. Comments from recruiters are that testing and profiling take a long time. Employers have commented that many recruiters they employ are not qualified to do either of these two steps. The same comment, I suspect, applies to most recruitment agencies. It is here that AI will come to the rescue. In this section, we will look at our process map step by step and examine each stage, looking to see if using AI can do it. Step 1: Gathering Information The first step is about examining the job description and establishing if it is up-to-date. This part of the recruitment process is supposed to be done every year by the line manager or whenever the performance appraisal is carried out. Job descriptions seem to vary vastly, from just the briefest of outlines to detailed documents, which specify how performance is to be measured. Whichever description you have, one thing is critical either at this first stage or at stage two—you must find out the key criteria for the job. This criterion is the essence of what’s critical for the person to have or display when he or she is in the post. It is ultimately the line manager’s responsibility to provide this information and keep it updated. Depending on where you are in the world, this goes by different names: • • • •

Key criteria Critical behavioral qualities Deal breakers Key competencies (Rowe 1995).

Step 1 can be completed by AI including ensuring that checking job descriptions are up-to-date—this will be linked to the performance appraisal tasks.



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Step 2: Writing the Advertisement Using Essentials and Desirables (Key Criteria) Step 2 is where we list the key criteria, which should be available in the job description. As mentioned before, this is sometimes referred to as the key competencies or deal breakers. We list these in two columns; Essentials and Desirables. This makes it easy for prospective candidates to see what’s needed clearly and at a later stage make the job of writing interview questions easier and more precise. It also gives us a template to do very precise short-listing. This part of the selection process is very important as it sets the basis for the psychological contract between the organization and its potential employee. It is the first and basic idea that the candidate gets of what will be expected of him or her throughout his or her stay in the organization. Essentials

Desirables

• Chartered or Certified Accountants or Only CPAs need apply

• MBA from Times-published top 20 universities

• Minimum of 9 years’ experience in a similar industry

• French-speaking and writing

• English, Swiss/German written and spoken

• Current European driving license

• Management of a similar-size function • Use of any significant database-driven accounting software system, such as Oracle, SAP, SAGE, Sun, or similar • Full understanding of Swiss government financial regulations and IFRS • Management of the organization’s budget cycle • Can demonstrate successful matrix management • Managing teams

You need to state any other information that the candidate needs to be aware of—where to get more information. Have the closing date shown and always ask for a current passport type photo with the power sentence “All short listed candidates will be tested”. Step 3: Prewritten Interview Questions AI can currently do all of this, including prewritten interview questions.

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Short-listing Step 4 This is the first chance we get to see the response from our work to date. If we have done an excellent job, we should not have many applicants, but those who have applied will be of excellent quality. Nevertheless, there is always a high possibility of having applicants who may overestimate their abilities or try to fake some of the Essential and Desirable skills. Therefore, it is crucial that applicants are required to attach proof documents (e.g., certificates, diplomas, and so on). This is the first stage of the process where bias can happen. Nevertheless, one has to keep in mind that these are entirely illogical arguments and should, therefore, not play any role in the final selection. Today’s laws will get you into court very quickly if you do not have robust and bias-free procedures in place. It is also a critical requirement to have a current photograph of the applicant—one that conforms to passport requirements. AI can do all of this, including outline checking of qualifications (Refer to digital footprints later in this chapter), and it will be completely bias-free. Step 5: Testing Step 5—testing. Can AI do the testing for us, and can it provide test results for succession planning? The answer is yes. Why Do We Do Testing as Part of Our Process? We know that internationally there is a widespread falsification of qualifications. This has been well reported in both the HR press and in international papers. One of the biggest and most widely reported was that of Dr Obarni. Employed without any testing, he administered a fatal dose of painkiller to one of his first patients who visited him and then fled the country to avoid prosecution. It transpired that he had a history of unfortunate medical incidents, and after a BBC investigation, it was found that it is likely he had never qualified as a medical doctor. Some of the falsifications of CVs are done in such a manner that it would take private detectives months to detect them. Even if a fact on



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a CV is true, like someone having a degree on a specific topic, there is always the issue of how fresh and up-to-date his or her knowledge is. We could examine CPE points, but have we the time, and could we trust them? What we are trying to establish with testing is can candidates do what we want them to do at the level they will be working and in their specialist area within our organization? This applies to all levels of the organization and for all but the most simple of jobs (Miller 2017d). About Testing and Its Development Psychological tests have been shown to be among our most powerful aids to the crucial problem of selecting and developing people at work. Some researchers have shown, for example, that significant increases in the gross national product could result from the more widespread use of tests in selection. Testing shows us what someone can do today—it will show how the applicants compare not only to each other but also to an external benchmark referred to as a norm group. This can be formed either by occupation or by country data. Tests are now well established and a part of the business selection process. Most of the top-performing world-leading companies make use of testing both for selection recruitment and for succession planning. Tests are now used for all types and levels of job selection, from the unskilled factory worker to senior management positions. Most of this use tends to be in larger organizations, apparently not only because they employ more staff, but also because they more readily appreciate the difficulties of obtaining top-quality employees (Miller 2017). What Is a Psychometric Test? An occupational test is merely a psychological test used in the world of work. There have been numerous attempts to define what a psychological test is. One definition of a test is as follows: A standardized sample of behavior which can be described by a numerical scale or category system.

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Psychological or psychometric tests aim to maximize objectivity by standardizing test conditions, instructions, time, content, scoring, and interpretation. All quality tests require that you (the tester) be qualified—this is enforced by both the British Psychological Society and its American counterpart. Quality tests can be purchased, administered, and interpreted only by qualified staff. Psychometric tools can be divided into two broad categories, and these are knowledge-based and person-based tests (Figure 6.2).

Figure 6.2  The structure of types of tests

1. If we examine knowledge-based tests first—for our needs in recruitment work application— they measure ability, aptitude, attainment, and most importantly, competence. These tests conform to the same design principles which are reliability, validity, standardization, and avoidance of bias. The tests all have right or wrong answers, and the final score is often compared with a norm group. This ensures that you select not on the basis of the current test group but on the basis of the industry norm at the level for which you are testing. The tests run in strict examination conditions and are always timed. This applies to web-based or pen/pencil face-toface testing.



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2. Person-based tests, the other form of testing, are not widely used in industry and commerce but have a strong following with academics. These include IQ tests and others, which aim to measure general intelligence. There are all sorts of tests you can use. The skill of the professional interviewer is to use only reliable tests that are valid for the job at hand. Testing materials are best purchased from reputable suppliers, some of which are as follows: • • • •

British Psychological Society Saville and Holdsworth (SHL) The Test Agency—Hogrefe The Psychological Corporation

Recently, it has been widely accepted by psychologists that ability and personality testing should be measured separately. There is no clear evidence that personality and ability are linked, and as a result, we have seen testing getting much more focused on work-related ability and knowledge, while personality profilers have improved and focused entirely on personality and how this affects one’s behavior in the workplace, despite one possessing skills and abilities. It is critical for good recruitment that branded tests are used, and it would be advisable to use materials only from bona fide suppliers. This is because such suppliers will have taken care to check that all the validity and reliability trials have complied with the British Psychological Society and American Psychological Society requirements and are entirely defendable in case of litigation All of this was true and accepted by psychologists up to 2017. But what happened after that? AI—deep learning—changed everything. From the first time you switched on a mobile phone, logged onto a computer, or used a credit card, you started to assimilate what is termed a digital footprint. Every one of us has one of these things; every time we use a smartphone, I pad, P.C. laptop, or credit/store loyalty card, we are adding to our footprint. This footprint can be accessed by algorithms (deep learning) from which we can access all kinds of information. For example,

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we can quickly deduce how clever you are, what books you have read, which university or college you have attended, and so on. So, we have this footprint that will show us very quickly just how smart you are and what your specialty is.

What Your Digital Footprint Reveals (Figure 6.3)— This Could Be the End of Testing AI will also be able to cross-reference all of the data to make sure that the candidate whom we are interviewing is not either exaggerating or telling outright lies. This is an excellent example of cognitive deep learning. Whether this process will replace conventional testing, it is yet to be seen, but I would ask you to keep an open mind. The providers of traditional testing material and also recruitment agency personnel have a vested interest in keeping what already exists. From the demonstrations on testing

Figure 6.3  The digital footprint



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via deep learning I have seen so far, I can say that they are very impressive and, of course, they will get better (Kosinski 2017). With AI, we also have the means to send out regret letters to those who fail to comply with our requirements. This part of the interviewing process is, of course, used in conjunction with performance appraisal for selecting people within the organization when we are looking at succession planning at different levels. Not only will we have the external digital footprint but also the footprint that has been created while people have been in the organization and using our technology. This sort of technological advancement scares some people, but it is a natural progression of all that has happened. It is we who have benefited greatly from using what we already have and know—all made possible by deep learning AI.

Your Digital Footprint and Personality Profiling Personality Profiling Step 6 Personality profiling is a unique tool for the recruiter. It gives us an opportunity to get a reliable picture of someone’s personality and therefore their fit into the job we have on offer. By finding about a person’s personality, the recruiter can gain insight as to how such a person will react in a situation of enormous pressure. Moreover, the candidate’s behavior can indicate whether he or she will be a fit for the organization’s overall culture. Why Do We Need This? It is not rocket science—people whose personality is in line with their job will be happier and should, therefore, produce better results. Now we have the very instruments to measure personality accurately, and as personality changes very little during one’s lifetime and especially adult life (Costa and McCrae 1997), it is a great predictor of future behavior in the organization. It is surprising that the use of personality profilers is not being greatly encouraged by universities to check that the degree and career someone is pursuing is going to be in line with one’s personality profile.

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Personality profilers give us the opportunity to see if the person applying for the job does, in fact, have a complementary personality for the type of job he or she is applying. This is related to job fit and is not the same as ability. Progress of Personality Profiles up to 2017 Today’s top profilers are accurate and of immense use for recruitment, promotion selection, and development. However, there is a note of caution here: there are thousands of profilers who are available—most of them are not personality profilers but type indicators. Type indicators are designed to put you neatly into a pigeonhole—you are one of these or one of those. They do not fit our requirements for interviewing, and many would not pass the test if they were challenged for relevance. Their attraction is that they are quick to do their job and cheap, and in the main they cannot be used by highly specialized personnel. What Profilers Should We Use? For the recruitment of someone up to a supervisory level, the most frequently recommended test is the NEO known in America as OCEAN and the rest of the world as NEO short for NEOAC or the EPI Eysenk Personality Inventory. Both contain about 60 questions and, in particular, the NEO is very fast to score. AI is now using the NEO as the personality questionnaire of choice. This is sometimes referred to as the BIG FIVE. For more senior personnel recruitment, development of succession planning is the most appropriate choice. Some of the best tools for it on the market are as follows: • • • • • •

NEO-PIR SHL OPQ32 (expensive) MPA (very new) Cattell 16PF (rather old) Holden HPI—sometimes tricky if feedback is needed Hogan scales (HPI, HDS, MVPI)



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All of the profiles listed, and this is not an exhaustive list, require the user to be qualified, either through the supplier or through the British or American Psychological societies. The business issue seems to be that there are not enough qualified people to run a profile at recruitment or for succession planning, and it takes a lot of time and money to do. I have included, in the following paragraph, an explanation of one of the most popular and well-known profilers. In the United States it’s referred to as OCEAN, and in Europe as NEO, short for NEOAC. Costa and McCrae’s Big Five NEO and NEO-PIR Costa 1997 The direct inheritors of the Eysenck and Cattelltian traditions are the Americans Costa and McCrae, whose work in the 1980s and 1990s revived the world of personality theory and testing. Working within the psychometric trait tradition, they settled on three and then five dimensions of personality. Now called the five-factor approach or five-factor model (FFM), there is now broad agreement on the approach/model, including between those who adopt the lexical approach—that is, those who look at natural language and the relationship between common terms for personality traits (Goldberg, 1992). Indeed, there is an active psycholexical tradition in personality theory that attempts to recover the basic dimensions of personality through analysis of natural language. Researchers have found convincing evidence, across various different languages, of the emergence of similar factors that are analogous to the Big Five. What they have not done, however, is to look at the association between personality traits and work outcomes. There are vigorous critiques of the FFM, but these have not reduced its popularity among personality researchers. Costa and McCrae (1985) argue that there are five basic unrelated dimensions of personality. These are Extroversion, Neuroticism, Agreeableness, Conscientiousness, and Openness to Experience. According to the researchers, each individual’s personality can be described as combinations of the traits mentioned previously. Each of the Big Five is a spectrum of these traits and everyone has some trait or the other in some degree. For example, someone high in extroversion can be characterized as an extrovert and someone very low in it as an introvert. All individuals

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have different personalities because these are made of unique combinations of the traits. The second body of research compares the NEO-PI, as the questionnaire is called, with other measures. A third, perhaps the most crucial, topic of applied research examines the validity of the measure—that is, to examine what the test scores predict. The test has been applied to various sorts of fields. However, it is in the field of work that organizational behavior researchers have become most interested in the FFM. It has proved to be a robust and reliable measure. For instance, relating the NEO-PI factor scores with four supervisor ratings, adaptive capacity, task orientation, interpersonal relations, and overall rating, they found that, whereas the correlations between conscientiousness and all four ratings were significantly positive and between extroversion it was so with three out of the four (not the overall rating), neither Openness to Experience nor Agreeableness was related to any of the ratings. What is clear from this literature is that, whereas some personality dimensions are good predictors of job proficiency, not all are. This is for at least three reasons. First, quite logically, different traits relate to different behaviors and, if a trait is unrelated to a particular occupational behavior, it is unlikely that the two are correlated. Thus, high neuroticism seems related only to negative behavior at work, such as absenteeism, but not to such things as productivity. This was the point made so clearly by ­Robertson and Kinder (1993). They showed that if there were good theoretical reasons to suppose certain specific traits (from a large battery) were related to specific, measurable work outcome variables, the validity coefficients were around 0.20 but could rise to 0.30.

What Exists Now and What’s Coming Now, back to AI and our deep cognitive learning. Our lifetime digital footprint can give a holistic picture of our personality over an extended period. There are some fascinating facts about the accuracy of personality profiling using AI. The process of personality profiling using AI provides us with a report that maps well to our prominent five personality profilers.



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The information provided is, therefore, served in an acceptable format for those used to using traditional personality profilers. Because the AI profile information comes from our digital footprint, that is, our personality information, it is much broader than ever before. The personality information can tell us what books you read and your sexual orientation, and can indicate your political intentions. The information available to us is infinite. Sticking with the personality profile, just how accurate is it? Recent Studies done at Stanford University in America and subsequent studies have shown that (Park et al. 2015) that is the algorithm in deep learning just looking at your Facebook likes, will show what can be accurately predicted. 11 likes—the algorithm will out-predict your work colleagues 100 likes—the algorithm will out-predict your family and friends 250 likes—the algorithm will out-predict your spouse. Want to try this for free www.applymagicsauce.com This is just from Face book; we can also get a good indication from what you write, for example, e-mails www.IBM/Watson/developer/cloud/ personality-insights.com is such a product However, deep learning can sample everything and is so incredibly accurate. The latest research and yet to be published is looking at how deep learning can read someone’s face and from that derive one’s personality. Although this is work in progress, already the deep learning algorithm can accurately distinguish introverts from extroverts by merely looking at a photograph. Our digital footprint appears to be the very best source of data for reporting on not only our intelligence but also our personality traits to a seemingly very high level. The future in this one area alone seems so exciting with so many possibilities, and like all deep learning applications, the results are almost instantaneous. Step six-personality. Can AI provide us with accurate personality profiling? On the basis of the evidence to date, the answer is yes. Profiling information is also essential for promotions, succession planning, development, and teambuilding.

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Step 7 Rechecking Prewritten Questions There is not much to do here, but it does give you the time to check through each of the criteria and make sure that all the knowledge-based questions make sense. It is at this stage that the questions are written on the marking sheets, and it must be clear who is asking the questions for each set of criteria. It is preferable if the professional interviewer starts off the questioning and the line manager asks all the probing questions. Questions need to be scored at the end of each question; so it is 10 points for a perfect answer regardless of how many probing questions are asked (a maximum of 4 per question). Do not be tempted to add in obvious questions. Stick specifically to questions from your Essentials list. If any amendment is made to the interview questions by either the manager or the HR Professional, it would be a good idea to run them through AI if nothing else—to check no bias has crept in. Step 8 Interview Arrangements This is an HR activity and is best done professionally; you might be thinking why don’t we do the whole of the rest of the interview by AI. It is a good question, but at the moment I do not think that society is ready for it. There is a strong social understanding that when one applies for a job, a senior person, the organization will interview you. It might seem old-fashioned, but it is very much a social norm. Interviewing is more than selecting the right person for the job; it is also a massive PR exercise. You want good people to come to the organization and you want them to feel part of the organization. So to get inclusion, a face-to-face interview, is desirable. Step 9 the Interview Our deep learning AI is capable of speech, sight, hearing, and writing, and the possibilities of getting AI fully integrated into the face-to-face interview are becoming real now. However, for reasons that I previously stated, this integration might be one step too far just at the moment. In this chapter, we have explored what AI is capable of. By any yardstick, it is incredible that all of the processes we have discussed so far are interlinked because what we find out in one process will help us in ­another. This is indeed a seamless integration.

CHAPTER 7

Pay and Rewards The Automation of Pay and Bonus Systems to Provide a Transparent Reward System—The Shift from Paying for Knowledge to Paying for Results We have seen in Chapter 5 how we use the performance appraisal system to gather data; you might well say what’s new; well, in fact, a lot. AI will be able to gather the three component parts of productivity and present them for Pay and a Bonus reward and select only the performance element for Bonus. The other two elements, Competence and Reliability, will work in balance as a preventer to bonus if the minimum scores are not correct. If this system is set up correctly, it will be initially self-funding, with no need to put artificial caps or restrictions on top performers. In the new labor market, there is going to be fierce competition for employees who have the right profile and skillset in the world of AI. If we take our three inputs, then automatically it will slot employees into the following categories: Poor Performers—no bonus and may face a corrective action procedure Average performers, who could be in the lower end of the bonus structure High Performers, who could earn up to 800 percent over basic salary. You need to remember when you are looking at this system that you could be dealing with rapidly decreasing numbers of employees. The people who will go first are the poor performers.

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Worked Example If we look again at the figures discussed in Chapter 4, each of the contributors to productivity has preset minimum figures a target score. Competency Competency score. For employees to be eligible for bonus, their competency score must be 70 or above. Those who have their scores manipulated by managers so they can have training, as a reward will find that they have been deselected from the bonus scheme for scoring under 70. Special provisions would need to be made for fresh graduates and college leaver’s as their competency entry score will not be high. They would get a percentage of the rate of the job until they were competent at 70 percent. Balancing all of this would be easy for an AI system. Performance Managers will need help here to set stretch targets and to measure them accurately. There will be undoubtedly more engagement from most employees, as they will realize the critical importance of getting high scores. Managers may be better using the (2011.dashboard) method of target setting rather than using SMART objectives. Progress on performance needs to be monitored on an ongoing basis to ensure good results are achieved. To join the bonus scheme, the minimum score we have set is 75 percent. Once the qualifying figures are reached, the only driver for the big bonus is Performance (Miller 2010). Reliability Reliability, specifically sickness, is a complicated issue. The Bradford formula software seems to have got it almost right and allocates a weighting depending on the type of sickness and whether or not it’s supported by medical certification. What it is good at doing is picking up and applying a significant penalty for odd days off that are uncertified. On the reliability chart, you will see we have a converter to convert Bradford scale scores onto a linear 0 to 100 score.



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On our pro former, for presets on sickness, the target attendance is 95 percent. As with performance and competency, if you are below 95 percent, you do not qualify for a bonus (Figure 7.1).

Productivity has pre set minimum figures; a target score Competency

100%

Performance – pre set standards 95%

Maximum standard 85%

Maximum standard 80% Ave 75%

Company required ave. 70%

Minimum standard 50%

Minimum standard 60% 0%

Reliability

Figure 7.1  Presetting your target scores

Teams When structuring a bonus system for teams, precisely the same process can be used; only the team will collectively have to meet the criteria. Managers should have their bonus linked to their team’s performance but must also meet the minimum scores themselves. AI systems will enable you to have multiple-type bonus systems in the organization. This is particularly important for asymmetric designs where to optimize different departments different schemes can be used. HRs who follow traditional practices would like everyone to be on the same scheme, but the variables are limitless in the future and will be more in tune with business needs (Miller 2017d). The score would then be used to place you into the right category for basic salary and bonus (Figure 7.2). Also, AI would keep track of all the training costs you accumulated, and with your ongoing and updated digital footprint would be able to select you for the following: • • • • •

Removal A lower-level job Sideways move Promotion at the same level Slotted for a succession plan

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ble ua as me l a lly Fu prais ap

BONUS PAID AS A PERCENTAGE OF SALARY 300 + %

y all ric me nu

26 % – 800 %

&m

10 – 25 %

rom

f red su ea 5 – 10 % Minimum Reliability level 95% Minimum Performance level 75% Minimum Competency level 70%

295%

240%

Prequalification scores before any bonus entitlement

Figure 7.2  How the data feeds bonus schemes

All of this would be done without bias or previous baggage from your time in the company

What’s Going to Happen to Generation Z or iGen as They Are Referred to? There is some confusion as to who Generation Z are. Some believe that this group comprises those who were born after 1997; if this is the case, some have already entered the work base. This group is sometimes referred to as millennials, but this term can cover a wider band of people like Generation X and Generation Y. So, for our present purposes, it is best to keep these bands out and confine ourselves to Generation Z. This group is also referred to as iGen (Workforce 2017; Figure 7.3). So, what we know about this group of people and the data about them are not particularly flattering. It is commonly believed (Sinek 2017) that this group is suffering from bad parenting. This has been brought about by some of the following factors: 1. Their parents have repeatedly told them that they are unique and as such have grown up to have more or less whatever they ask for. 2. They have grown up in a schooling system that has rewarded them even if they failed. This is made people who have failed feel worse



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Figure 7.3  The generations

and people who have succeeded have realized that they have had the same reward as those that failed. Some people failed in schools where they were given medals. In the cold light of day, in hindsight, this situation is ridiculous. 3. They are also the first generation to grow up in an entirely technological world. As such, it is the first generation to expect instant gratification like instant shopping, instant rewards, instant likes on social media, and so on. If they want to watch a movie, it must be instant, if they want to date, dating online is instant. So, these instant expectations will transfer to the workplace where they will expect instant gratification, instant promotion, instant success, and so on and so forth. We all know that is not the reality of the workplace. The evidence is that this is the first group of people who are genuinely comfortable with multitasking and with using available technology to get results. Despite this comfort level, the evidence is that this group is not happy. It has a high suicide rate, some of which is linked with drug overdose and a propensity to drop out. Depression among this group is high. There is no doubt in my mind that this group of talented people has a lot to offer to society, and they will make up 24 percent of the available workforce by 2020. This coincides precisely with the main impact of AI

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and reducing numbers worldwide. The issue organizations will have to grapple with if they are to involve Generation Z is how they are best utilized in the new companies that are run with AI. The balancing act that HR and workforce planners will have to do now is to accommodate the three generations: Generation X, Generation Y, and the new intake Generation Z. Overlayered on top of these are the types of people whom you currently employ: poor performers, average performers, and talented people. Getting the mix right for your AI-led organization will be a complicated and vexing exercise. One thing we are entirely sure of is that employment numbers will start to decrease; there is no evidence that full employment will ever return. The purpose of this book has always been to help you get the best out of your existing processes and to prepare the ground for you to excel with AI. The complexities of employment, the reducing numbers of people required in the workplace, and the age balance are all factors that go beyond HR and must be sorted out by governments. Although governments have actively been talking about sorting out the problem of mass unemployment, there is little evidence that anything as yet is happening. The most prominent proponents of the change are the leaders in Silicon Valley. They have identified the massive problems that are likely to come with increasing AI and have been very vocal in their opinions about options like having universal basic income (USB). USB was described in some detail in Chapter 2.

CHAPTER 8

New Skills Needed to Manage This Massive Paradigm Shift from Traditional HR To Artificial Intelligence Focused HR

Have You the Right Skillset? 1. There are nine critical skills needed for being successful in the HR AI future. Rate yourself against these skills and devise for each (if necessary) a plan to develop and improve yourself: Do you have a good working knowledge of AI—specifically cognitive deep learning? 2. Can you understand basic algorithms and perhaps write them down? (You do not have to be an IT techy to do this.). 3. Business awareness. Do you know what the key performance indicators are in your organization? Can you calculate return on investment? 4. Problem-solving. Do you have a range of techniques that you can adapt to solve complicated issues? 5. Creativity. How do you rate your creativity? Do you use established techniques to aid the creative process in others? 6. HR-specific professional skills. Are you an expert in HR, in all the 10 critical areas? If not, what’s your plan?

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7. Forward planning. Have you got the necessary skills to do forecasting on trends, correlations, and to use predictive data? 8. Professionally qualified. Do you consider yourself to be professionally qualified in HR to be seen as an internal consultant? 9. Project manager. Do you have the necessary skills to set up, run, and deliver projects on time and within budget?

The HR Job The greatest asset of today’s HR professionals is the introduction of AI in organizations. Internal HR consultants are as follows: • Employed full time by the organization. • Likely to understand the overall business better than external consultants. • Sometimes more knowledgeable than external consultants. You should know your business and industry exceptionally well. You may also have developed an approach or methodology that is ahead of any external consultancy group. • Usually part of a specific function—Information Technology, Training and Development, Finance, Business Development, Internal Audit, and so on. • Should be aware of the right language and culture of the organization. You must know how things work and how to get things done. • Able to identify yourself with the organization and its ambitions— as employees you have a big emotional commitment. • Liable to be taken for granted, or you will lack the credibility of some external consultants. • Prone to being too emotionally involved in an organization—thus perhaps influencing your ability to be truly objective. This will be a significant issue with AI, and people will be displaced, and in large numbers • Internal HR personnel will have to remain in the organizations and coexist with the consequences of their advice—you will be



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still around in the organization long after the external consultants have left. • The HR professional will be able to spread their knowledge and experience throughout the organization—thus you can enhance your organization’s overall capability.

Getting to Grips with the Numbers and Types of Employees It is essential to do a rightsizing exercise as soon as you join. This will give you two very useful pieces of information. How many people you need to run your organization, and secondly, precisely how many Poor performers, Average performers, and Talented people you have. This data will be critical when reprofiling the organization and integrating AI into it. How to do this is referred to in How to Calculate How Many People You Need—Including Rightsizing section of Chapter 3. You will need to decide how the organizational mix is made up. You will have your existing establishment currently as poor, average, and talented people. They are then split by age Generation X and Generation Y. Also by 2020, there will be 24 percent of the available workforce of ­Generation Z or iGen. Sorting out the organizational balance will be an exciting process and an essential factor for moving into the AI era.

The Future Is Bright—For those Bold Enough to Make Things Happen The world is on a tipping plate. Massive change and unbelievable technological advancements are here now, and we are in the midst of the most exciting paradigm shift ever. In this context, HR has a key role to play and to act swiftly. Listen to those who have the knowledge; many are referred to in this book. It’s time to excel and to be part of a very different future. The issue of employment numbers and the future of employment is a matter for governments to wrestle with and solve. But AI will not wait (David and Haar 2018).

CHAPTER 9

Useful Formula and the Productivity Dashboard Days Worked—Formula 10 Prime Working Days Formula PWD In nearly all calculations about work, you will need this calculation sooner or later (Figure 9.1). How many days do people work in your organization? Standard reply 365, but it is not true. How many days do your HR work? The calculation will vary from company to company; an acknowledged average is 226 days a year. When you use the following formula, you will need to adjust the figures for an exact fit for your company.

Figure 9.1  Formula

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Days in the year 365 − (Holidays 25 + Public Holidays 10 + Weekends 104) = 226 PWD The figure of 226 becomes the number of days for productivity calculations, business expansion, or contraction calculations and the basis for calculating the employee standard unit cost (ESUC). You will use this for rightsizing mainly before doing any implementation of AI.

What Is the ESUC for Days Worked? Formula 5 The ESUC is the basis of all calculations for efficiency, production costs, and efficiency savings. This is one very emotive figure; once you understand how it is calculated, then run it past the finance director to get the figure approved—remember, this is a rough unit cost, it is an average—not an exact figure. It is good enough for us to do a range of calculations and predictions. A Worked Example of Formula 5 There is a company that employs 3,000 people with a total salary bill that includes pay, overtime, car allowance, housing allowance, and all allowances, including medical and any tax contributions. In this example, it amounts to £125,280,000.00. You will see on the calculation that the total salary costs are multiplied by 2. Two is the real expenses we can attribute to every employee training, electricity, facilities, IT, floor space, company vehicles, and so on. If you have lots of spare time, you can work this out by looking at the annual accounts (private sector only), but for simplicity, we use 2 as the factor. There are a few companies where the factor would be higher, such as in Google, Apple, Facebook, and so on. Remember, you are not the company’s mathematics department— you need working standard figures. We then divide the top-line total by the number of employees, which gives us X. X is then divided by 226 (PWD) to give you the ESUC per day, which is the actual cost of each employee in the organization.



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X (£83, 520)  ESUC £369 divided by 8 (depending on country) = 226 to get hour rate £46 Understanding these two formulas 5 and 12 enables you to take a hard look at what people do in the time they are available for work. I have heard few comments on calculating the PWD, but the ESUC always seems very controversial. Often the comment from CFOs is that it is not the way we do it—my reply is always the same to this statement—“Well please show me the formula you use”—of course, there is not one. In any organization with big change programs and AI is no exception, cost–benefit and market advantage will be to of the agenda. I suspect with AI it will be so fierce that just surviving might be a strategy.

How Much Does Appraisal Cost—Formula 6 Performance appraisal is one of the most costly, time-intensive, and disliked processes inflicted upon by employees by HR. Ask HR how much this process costs—don’t hold your breath while waiting for the reply. The fact is that a properly run performance appraisal is essential particularly for workforce planners. It gives us two of our three critical pieces of management information—competency scores and performance scores. So, like it or hate it, we need it. The cost of a performance appraisal for a regular (not 360) appraisal is TH × TE × ESUC = annual cost of the yearly appraisal, where TH is the total hours spent including all processing time and TE is the total number of employees. ESUC is the unit cost per hour of each employee. So, let’s examine the cost of an appraisal for a company employing 5,000 people with an average employee unit cost of £46 per hour. For each appraisal: Appraiser’s time preparing 0.5 hour × £46 Appraisee’s time preparing 0.5 hour × £46

£23.00 £23.00

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Appraisal time for appraiser 1 hour × £46 £46.00 Appraisal time of appraisee 1 hour × £46 £46.00 After the appraisal—completing £23.00 documentation appraiser 0.5 hour × £46 After the appraisal—talking and reflecting £23.00 on the process 0.5 hour × £46 HR processing time for each appraisal £23.00 0.5 hour × £46 Subtotal £207.00 3,000 employees × £207 £621,000.00 Also, it would be fair to add the cost of misdirected training identified from appraisal. This could be as high as 70 percent of the training budget, the cost of which would need to be added to the calculation. In our example, we have a cost to the business of £621,000.00—to get just a simple return on investment, we need to get every year £621,000.00 of measurable bottomline benefits. Can your appraisal system deliver this type of performance? If you go beyond return on investment to seek added value, then it would be reasonable to expect to see a 20-percent added value every year. In other words, every year the system is in place we should expect to see minimum measurable benefits of £745,200.00. Can your system deliver this type of business performance? Performance appraisal is a pivotal platform for our AI activities, providing you are not using the 360-degree appraisal. Then, the transition should be relatively smooth.

HR and Training ROI Formula 8 Added value (actual business value created in 1 year) − total cost of activity = Added value (or loss). This is a straightforward formula used to measure added value. It is particularly relevant to workforce planners in the New Workforce planning arena as the value created is so high that it would be the basis for making the department a profit center in its own right. A very recent example would be the BMW. Value created 7 percent improvement in productivity + reduction in sickness − the process costs €50,000 = ROI added value



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How Many People Do You Need to Run the Organization? Formula 9 The question most often asked by CEOs and CFOs is how many people do we need to run the organization? The question then that needs to be asked is “Is all of the planned work being completed?” The answer most of the time is a somewhat reluctant one—but it is yes in most cases. If that is so, then certain assumptions can be made and the following formula can be deployed to get a gauge of the right size needed for the organization. Total staff employed × PWD − (training days and Reliability total days) = Man days needed to run the organization The result is one of fact—that is, how many person-days were needed. There is no suggestion that people cannot be genuinely off from work when they are authorized as sick or that all training should stop, but the figure gives you a baseline to work from. In the Western world, during 2011 and 2012, in many organizations, right-sized reductions of 20 percent have had little, if any detrimental, effect on the functioning of organizations. A full-worked end-to-end example is shown in Chapter 3 (see Section How to Calculate the Rightsize of Any Organization). There are lots of missing formulas—most don’t work, many others have just been replaced with appropriate software packages. One of my favorite tools as a consultant is the one devised by the late Dr Michael Hammer—FACE. Is the tool Fast, is it Accurate, is it Cheap to use, is it Easy to use? This FACE is an advantageous concept to keep in mind when being part of the New Workforce Planning. Focus on matters that will make a difference to organizational efficiency—get the big picture—keep focus at the strategic level—that is where the significant gains are made.

Background to the Dashboard Concept The productivity dashboard is a significant leap for HR and is far more in tune with what is done to produce real organizational results. The first move in this measurement many years ago was the key performance indicators. They were a good start—but just like competencies, the process

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rapidly got overcomplicated as various consultancy companies sought to sell the system—warts and all. Key performance indicators can, if one is not careful, work against the total benefit to the organization. The Three Productivity Indicators In the previous chapters, we have discussed Competency, Performance, and Reliability and know that we can measure all three (Figure 9.2). One of the great strengths of the performance dashboard is that it is put on display in each department, so you can see at a glance how you are performing throughout the year against the target scores or presets.

Figure 9.2  Productivity dashboard

Staff Satisfaction To recap: Competency gives the organization quality, safety, and conformance to standards. Performance gives volume, speed, output, low processing cost, and agility. Reliability gives attendance, value, minimum headcount, and dependability through stability.



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These three measures give us that all-important productivity. There is much evidence that shows that high levels of staff satisfaction reflect in low turnover, and often but not always, higher productivity. Measuring staff satisfaction is, therefore, a critical factor in our dashboard. A word of caution here—be careful not to be overzealous and overdo things; Doing a survey once a year should be ample, less, if you are in a period of rapid change as with AI. Most organizations prefer to design their own surveys, so make sure you are satisfied that they will give you the evidence that you need and that the results are available on a 1-to-100 score as previously discussed. If you want to buy a ready-made solution, you could use one of the more generic products such as the SHL companies product “corporate culture lite”. Once the survey has been completed over some years, you could start doing correlations with its results and see how they relate to the three productivity drivers, Competency, Performance, and Reliability. It is unlikely that Workforce Planning will be involved in doing the surveys, but the scored results are a critical part of our data collection needed for various correlation exercises. Added Value—Formula 8 What is added value? It is the value you can demonstrate above the total cost. We use Formula 8 HR and training ROI. AV (actual business value created in 1 year) − total cost of activity = added value (or loss). Workforce Planning is the most ideal department for adding value to an organization, thereby turning it into a profit center; this department should be closely followed, we hope, by the HR department. The value is measured in 1 year so that it is directly linked to most organizations’ budgetary cycle. The role of HR has to change because of two major developments, the changing quality of people and a growing need to measure human capital and to develop that capital into a measurable strategic business advantage. People are continually improving; we now have higher education standards, greater literacy levels, and a high level of competence with work-related IT. All this makes today’s employee vastly superior to

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an employee at any other time in history. Today’s employee, therefore, needs less management control and less process control to work effectively. Given this backdrop, it is essential that the role of HR changes in all its facets to reflect the modern-day environment. Businesses now want an HR department that can add value, rather than adding substantial costs. The department, in other words, must be a profit center. Logically, if AI HR is a major player in all things related to our most significant cost and asset—people—how could it possibly be a cost center? The Dashboard chart shown Figure 9.2 sets out to fix the standard for the current financial year. In the example on the chart, we have the added value target preset at 20 percent. If this preset was for the entire HR function, then the added value it would need to show would be a contribution in one financial year that was 20 percent over total cost. It is up to you to decide at what level you set the bar, start off at a manageable figure, say 5 percent, and move upward as you gain confidence and success. In HR functions, workforce planning would be an excellent first choice to be moved to added value results. If you had involved yourself intimately with the AI plan, your ROI should be massive.

Process Maps—Business Processes At some point of time when you are looking at AI, it will be necessary to do some business process mapping. AI gives us the unique opportunity to do things completely different. So, it is not about tinkering with what we have got, it is a rethink of the complete process or even the abolishing of the process. Looking at business processes from a re-engineering point of view gives us the opportunity to go back to a clean sheet of paper with no preconceived ideas or limitations. Hammer described this process as a dramatic and radical redesign approach to a process. To do a business process map is not difficult. Organizations have spent millions with consultants getting them to do a job that they could quickly do themselves. As this will be one of the tools you will need to use at some point of time, it is included in this book, not in any great detail, but enough for you to grasp the concepts and do it yourself (Miller 2017c).



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A business process map of an existing process is merely a snapshot in time. It is a visual representation of how the process works, not how you would like it to be. This process is usually mapped out onto paper; you can use Microsoft Visio software which is straightforward to use and may be better for AI; my advice is it is always better to work on paper, nearly all the professionals do as its much easier to correct and adjust. Also, you can see the complete picture of the process. This is particularly important when you are going to use AI as you need to be very clear about what the inputs are and what outputs you desire. The symbols and map are drawn onto a swimlane chart (Figure 9.3), each lane representing a function, not a person. This is the perfect time to make sure you have your processes mapped and where you can take advantage of improvements before making the switch to AI (Bandey 2018). However, don’t believe that a half way house is the end of the road, the aim needs to be full AI.

DEPARTMENTS

TIME LINE - Example

Administration & post room)

Finance

Engineering

Operations

Figure 9.3  Swimlane

Remember, once you have your process map, what you are looking for AI to do is to radically redesign or scrap the process. Don’t start looking for small incremental improvements that are not what AI has to offer. I mention this because only too often I see organizations producing process maps and trying to impress upon management by saying we have achieved a 5 or 10 percent improvement in the process, where if they had redesigned, they would have got 30 or 40 percent.

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In this brief illustration, the key points are symbols that represent stages in the process (Figure 9.4). Moreover, once the process is understood, it is mapped onto a chart so you can see the entire process as it has happened.

Main symbols CHECK ACTION FILE DELAY DIRECTION Figure 9.4  The symbols

In the example, we follow a simple job of distributing post in a large office. This process is viewed once or twice, timings and numbers are taken, and then the process of mapping it starts, so we have a process map which we have created. When doing this, you need to be careful that workers do not start working at a superfast rate or missing lunch or tea breaks to impress you. What you are trying to capture is the truth as it happens. So, if you have employees who generally stop for a cigarette break, official or unofficial, it needs to be recorded. We are looking to capture elapsed time. So, if the process does not finish at the end of the day, then the elapsed time would be from the end of one day until its finalization on another day. Once you have practiced this a few times, you will find it very straightforward to do. The symbols we use are as follows: The example we are using is a real company, the details of which are shown herewith: Postal delivery process—M. Co. America Post received 7.30 am in the post room



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Figure 9.5  The completed process map

Post opened approximately 250 items per day. Two people are involved in this operation which takes 30 minutes. All incoming items are recorded in a book—the book records the person who sent the correspondence, the company, the topic, and to whom it has been assigned. One person does this task, and it takes 1½ hours to complete. Items that are difficult to handle are sent to a senior manager in Administration who will do the allocation. This can take some time. But if there is undue delay, the item is usually put back into the system the next day for recording and then delivery. When the post delivery clerk arrives, he sorts the mails, loads the post trolley, and commences the delivery of the mail. Sorting and loading takes ½ hour. Delivery of the mail by the Post Delivery Clerk to the Four offices as shown on the swimlane diagram figure 9.3. The time taken for pushing the trolley from one department to the other is normally 12 minutes. Each item received is signed for 5 seconds taken per item. When the post clerk returns to the post room, someone later in the day checks the book to ensure that all items of post have

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been signed and accounted for. If there are items for which the recipient has not signed, then the item is written in the book for delivery the next day. The postal clerk also prepares a handwritten note explaining when the item was received and when it was attempted to be delivered. Don’t forget—the post room staff work 8 hours a day. They will have a 1-hour lunch break and tea/coffee breaks (15 minutes) (Figure 9.5). This process has been in operation for 10 years, with everyone expressing satisfaction.

References Bandey, A. 2018. Mashreq Revamps HR Strategy for Digital Future. Gulf News. Bauckhage, C. 2017. Keynote speech AI. Bonn, Germany: Bonn University. Budnick, C.J., M. Kowal, and A.M. Santuzzi. 2015. “Social anxiety and the ironic effects of positive interviewer feedback.” Anxiety, Stress, and Coping 28, no. 1, pp. 71–87. doi:10.1080/10615806.2014.919386 Costa, P., and R. McCrae. 1997. Longitudinal Stability of Adult Personality. Google Scholar. Davenport, T.H., and R. Ronanki. February, 2018. “Artificial Intelligence for the Real World.” Harvard Business Review, pp. 108–16. David, B., and J. Haar. 2018. “Smart Technology, Artificial Intelligence, Robotics, and Algorithms (STARA): Employees’ Perceptions of Our Future Workplace.” Journal of Management and Organization 24, no. 2, pp. 239–57. Diamansis, P. 2017. A.I. Eats the World SU World Summit. China’s 5$ chipsets. Gigova, R. 2017. “Who Vladimir Putin Thinks Will Rule the World.” CNN, September 2, 2017. Gurman, M. 2018. “Apple becomes Americas first $1 Trillion company.” ­Bloomberg, August 2, 2018. Howard, J. April 10, 2017. A.I. Eat’s the world, SU Global summit. June 2016. Ageing workforce Japan, Nikkei Asia review. June 2016. Ageing workforce Japan, Nikkei Asia review. Kosinski, M. 2017. Secrets of Silicon Valley. BBC documentary. Loch, C., F.J. Sting, N. Bauer, and H. Mauermann. March, 2010. “BMW Defusing the Demographic Time Bomb.” Harvard Business Review. Miller, T. 2010. Competency v Performance. Croners Publication. Miller, T. 2014. Downsizing and Right-sizing—Why It Is Needed and How to Do It. Croners Publications. Miller, T. 2017a. HR Analytics and Innovations in HR. New York, NY: Business expert Press. Miller, T. 2017b. HR as Business Partner. New York, NY: Business Expert Press. Miller, T. 2017c. Human Resources a Business Partner—How to Maximize the Value and Contribution of HR. New York, NY: Business Expert Press, pp. 83–87. Miller, T. 2017d. Successful Interviewing—A Talent Focused Approach to Successful Recruitment and Selection. New York, NY: Business Expert Press, p. 25. Miller, T. 2018. Massive Change. White Paper, Google Scholar. Miller, T., and S. Brelade. 1997. 101 Tips for Trainers. Financial Times, p. 1–30.

122 REFERENCES

Murphy, T.A. 2018. Universal Basic Income. London, UK: My Researcher for UBI; at UCL. Musk, E. 2018. “Life with A.I.” CNBC make it, March 13, 2018. Park Communications Ltd. 2018. Millennials to Rule the Workplace by 2020. Park Communications Ltd. Park, G., H.A. Schwartz, J. C. Eichstaedt, M.L. Kern, M. Kosinski, D.J. Stillwell, L.H. Ungar, and M.E. Seligman. 2015. “Automatic Personality Assessment through Social Media Language.” Journal of Personality and Social Psychology 108, no. 6, pp. 934–952. Rowe, C. 1995. “Models in Recruitment, Assessment and Staff Development.” Industrial and Commercial Training 27, no. 11, pp. 12–17. Sinek, S. 2017. The Millennial Question. Inside IQ Quest—Tom Bilyeu. Smith, A. 1776. The Wealth of Nations. London, UK: W. Strahan and T. Cadell. Study.com. 2018. What are Algorithms. Summerlad, J. 2018. “Google’s Decision to Build A.I. for Pentagon.” Independent News, March 9, 2018. Widerquist, K. 2017. The Cost of Basic Income. Workforce. 2017. Will Millennial’s and Gen Z Rule the Workforce by 2020?

Suggested Readings February 2018. Working hours in Germany, Financial Times. Futurism.com. January 22, 2018. Automation Impact in the U.S. IBM Watson. 2018. Case studies. Jia, D. 2017. “Ping interview.” Fox Conn robots, Digitimes, January 1, 2017. Kosinski, M. 2017. The end of Privacy Keynote speech. Stanford, CA: Stanford University. Miller, T. 2011. The HR Dashboard. London, UK: Croner Publication. Miller, T. 2017a. Innovations in Workforce Planning and HR Analytics. New York, NY: Business Expert Press. Miller, T. 2017b. Innovations in Workforce Planning. New York, NY: Business Expert Press, pp. 44–60. Miller, T. 2018. The Changing Face of Training. White paper Google Scholar. Shane, B. December, 2012. Schools Use Smart Devices to Help Make Kids Smarter. USA Today. Steers, M., R. Wickham, and L. Acitelli. 2014. “How Facebook Usage is Linked to Depressive Symptoms.” Journal of Social and clinical psychology 33, no. 8, pp. 701–31. Timar, D. 2012. Why Social Media Is so Addictive to Many. Cambridge, MA: Harvard Research Scientists. Walsh, C. 2006. Key management Ratios. Upper Saddle River, NJ: FT Prentice Hall.

Professional Researchers Treglown Luke, University of Bath Petropoulou Kelly, University College London Toni Ann Murphy, University College London Cui Ling Lay, University College London Fuling Chen, Wuhan University China.

About the Author Dr. Tony Miller, MBA, FCIPD, FinstAM, MRSH, MAPS, MBPS, FILM, is adjunct professor specializing in productivity improvements through people and Artificial Intelligence (AI). In the past few years, he has had twenty books published, one of which is in Chinese. Well traveled, he has worked around the world, in 36 countries in the past ten years, including the United States, and has acted as a specialist consultant for many top companies. His ability to continually create outstanding performance through people has resulted in his appearing on TV regularly; he designed a mathematical model to enable any organization to calculate precisely how many people it needs, essential for any implementation of AI applications. He is much sought after as a speaker and runs master classes and management briefings on introducing AI for organizational improvement.

Index Note: Page numbers followed by f indicates figures. Added value, 112, 115–116 Aging workforce, 11–12 Algorithm, definition of, 7 Apple, 7 Artificial intelligence (AI) case studies, 8–10 cognitive engagement, 6 cognitive insight, 5–6 deep neural network, 4f development steps, 2f historical development of, 1–4 HR processes with, aligning, 55–78 impact of, 77–78, 78f mathematical neuron, 3f performance appraisal with, aligning, 55f, 70–75 process automation, 5 productivity components, 71f significant factors of, 2 traditional HR to AI focused HR, 105–107 types of, 4–6 Asymmetrical organizations, 45, 45f Audience analysis, 80 Axiom, 2

analysis and problem-solving, 60–61 communicating and influencing, 61 competency framework, concept of, 57 competency standards, setting, 63f competency unit, 58 definition of, 57 delivering results and quality, 60 example of, 58–59 ingredients, understanding, 56–58 key points about, 63–64 leadership, 62 organizational efficiency, processes added to, 56f organizational requirement of, 58 structure of, 59f Competency-based training training evaluation for, 81–82 training needs analysis for, 80–81 Content analysis, 80 Core skills, definition of, 38 Costa and McCrae (1985), 95–96 Cost–benefit analysis, 80 Crédit Mutuel, case study, 8

Basic income. See Universal Basic Income Basic Income Earth Network (BIEN) principle, 13 Basic income guarantee, 14 Big Data, 2, 8 BIG FIVE, 94, 95 Bonus schemes, 101–102, 102f Bradford formula scores, 69f, 100

Depression, 103 Digital footprint, 92–93, 92f Downsizing, 50

Cognitive engagement, 6 Cognitive insight, 5–6 Competency

Employee standard unit cost (ESUC), 110 Employment numbers aging workforce, 11–12 fewer hours of work, 13 massive impact for, 11–15, 12f, 16f universal basic income, 13–15 Environment analysis, 80

128 INDEX

Facebook, 7 FACE principle, 29, 113 Five-factor approach. See Five-factor model (FFM) Five-factor model (FFM), 95 5 FORCES, 24 Formulas formula 10, days worked, 109–110 formula 5, ESUC for days worked, 110–111 formula 6, cost of performance appraisal, 111–112 formula 8, HR and training ROI, 112, 115–116 formula 9, people need to run organization, 113 Fox Bots, 6 Fox Conn, 5 Front-end analysis, 79 Generation X, 102–104 Generation Y, 102–104 Generation Z, 84, 102–104 Google, 47 Google Tenser Flow, 7 Hopper Bonus scheme, 65 HR strategic action, 28–40 6 S model, 30–31, 31f basic concept of, 32 creativity, 29–30 deliverables, 37–39 dependencies, 39–40 overview of, 28–29 process of, 32–34 risks, 39 scope of, 36 strategic action plans, background to, 34–36 training program directed towards product areas, 36–37 HR strategic schema, use of, 22–28 actions, 27 alignment, 27 future requirements, 25 HR strategic map, 23f overview of, 22–24

performance/competence and reliability, 26–27 planning, 26 reengineering, 25 strategic input, 24–25 survey, 28 trends, 26 workforce planning and trends, 26 HR strategy, need for, 15–22 HR role at critical levels, 17f HR strategic schema, use of, 21–22 mission statement, 18–20 operating plan or business plan, 21 overview of, 15–18 strategy, 20–21 timelines for, 22 vision, 18 Human resources (HR) artificial intelligence, introduction of, 106–107 employment numbers, massive impact for, 11–15 end-to-end working process, 40–41 future of employment, 107 getting to grips with employees, 107 internal HR consultants, 106–107 reality, 11 role at critical levels, 17f skillset required for, 105–106 strategic action, 28–40 strategic approval, 28 strategic mix, 28 strategic schema, use of, 22–28 strategy, need for, 15–22 traditional to AI focused, 105–107 iGen. See Generation Z iGen Workforce (2017), 102, 103f Job analysis, 80 Job retention, 27 Job security, 27 Key performance indicators, 113–114 Korean Air, case study, 9–10 Media analysis, 80 Microsoft, 7

INDEX 129

Millennials, 102 MILLER model, 24–25 Miller/Sporlein model, 30–31, 31f NASA, 5 NEOAC, 95 NEO-PI, 96 Neuro networks, 3, 4f Norm group, 89 OCEAN, 95 Organizational design asymmetrical organizations, 45, 45f founding companies using form of, 46–47 future of, 47 people-centric organizations, 45–48, 46f ratios, 48–49 symmetrical organizations, 44, 44f traditional organizations, history of, 43–44 types of, 44–48 Pay and rewards bonus schemes, 101–102, 102f competency score, 100 employee categories, 99 Generation X, Y and Z, 102–104, 103f pay and bonus systems, automation of, 99 performance measurement, 100 reliability, 100–101 target scores, presetting, 101f transparent reward system, 99 People-centric organizations, 45–48, 46f Performance appraisal with artificial intelligence, aligning, 55f, 70–75 individual benefits, 77 as motivational tool, 75–77 organizational benefits, 76 severe defect in, 72–75 Performance appraisal, cost of, 111–112

Performance-based training, 82–84, 82–83f Performance data gathering, 66 managed workforce, 65 measurement and automation of, 64–66 objectives and stretch targets, setting of, 65–66 performance expectations, 64 performance standards, setting, 66f self-motivated staff, 65 Performance measurement, 100 Personality profiling, 93–97 need for, 93–94 profilers for use, 94–95 progress of, 94 PEST analysis, 24 Process automation, 5 Process maps business, 116–120, 119f Swimlane chart, 117, 117f symbols representing stages, 118, 118f Process re-engineering, 25 Productivity dashboard added value, 115–116 overview of, 113–114, 114f productivity indicators, 114 staff satisfaction, 114–115 Productivity indicators, 114 Productivity measurement, 55 Profiling information, 97 Psychological tests, 89 Psychometric tests knowledge-based, 90 overview of, 89–90, 90f person-based, 91 Quantum Computers, 7 Rearview mirror effect, 72 Recruitment processes advertisement using essentials and desirables, writing, 87 digital footprint, 92–93 gathering information, 86 interview, 98

130 INDEX

Recruitment processes (continued ) interview arrangements, 98 personality profiling, 93–97 prewritten interview questions, 87 process approach, 85–86, 85f rechecking prewritten questions, 98 short-listing, 88 testing, 88–92 Reliability, 100–101 Bradford formula scores, 69f definition of, 67 measurement of, 67–70 poor, cost of, 70 Return on Investment (ROI), 27, 81, 82, 84 Rightsizing, 50 calculation of, 51–53 Robot economy, 14 Self-thinking, 3 6 S model, 30–31, 31f Staff satisfaction, 114–115 Strategic action plan deliverables, 35 dependencies, 36 example of, 36 overview of, 34–35 plan, 35 risks of, 35 scope of, 35 sign off, 36 sign on, 36 Swimlane chart, 117, 117f

Symmetrical organizations, 44, 44f Target scores, presetting, 101f Task analysis, 80 Traditional organizations, history of, 43–44 Training evaluation, automation of, 81–82 Training needs analysis (TNA) audience analysis, 80 automation of, 80–81 competency approach, 81f content analysis, 80 cost–benefit analysis, 80 environment analysis, 80 job analysis, 80 media analysis, 80 old approach, 79 performance gaps, 79 task analysis, 80 Transparent reward system, 99 Triple W objective setting©, 32–33 Universal basic income (UBI) cost of, 15 definition of, 13 driving, 14 implementation method, 13–14 need for, 14 Woodside, case study, 8 Workforce planning, 115 WORKING from HOME, 26

OTHER TITLES IN THE HUMAN RESOURCE MANAGEMENT AND ORGANIZATIONAL BEHAVIOR COLLECTION • Conflict and Leadership: How to Harness the Power of Conflict to Create Better Leaders and Build Thriving Teams by Christian Muntean • Creating the Accountability Culture: The Science of Life Changing Leadership by Yvonnne Thompson • Managing Organizational Change: The Measurable Benefits of Applied iOCM by Linda C. Mattingly • Lead Self First Before Leading Others: A Life Planning Resource by Stephen K. Hacker and Marvin Washington • The HOW of Leadership: Inspire People to Achieve Extraordinary Results by Maxwell Ubah • Leading the High-Performing Company: A Transformational Guide to Growing Your Business and Outperforming Your Competition by Heidi Pozzo • The Concise Coaching Handbook: How to Coach Yourself and Others to Get Business Results by Elizabeth Dickinson • How Successful Engineers Become Great Business Leaders by Paul Rulkens • Redefining Competency Based Education: Competence for Life by Nina Jones Morel and Bruce Griffiths • Creating a Successful Consulting Practice by Gary W. Randazzo • Skilling India: Challenges and Opportunities by S. Nayana Tara • Redefining Competency Based Education: Competence for Life by Nina Morel • No Dumbing Down: A No-Nonsense Guide for CEOs on Organization Growth by Karen D. Walker • From Behind the Desk to the Front of the Stage: How to Enhance Your Presentation Skills by David Worsfold • Virtual Vic: A Management Fable by Laurence M. Rose

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The New World of Human Resources and Employment

How Artificial Intelligence and Process Redesign is Driving Dramatic Change Tony Miller Artificial intelligence (AI) will change the world, as we know it within only a few years. Its most significant impact will be on our human resource (HR). What is AI and what’s made it significant– the answers lie within this concise book. The book offers organizations the catalyst for swift change to take strategic advantage of what AI has to offer. In this book are some of the HR processes that can be changed today, suggestions on what’s available, and some resources readers may wish to use. The evidence so far is that many HR functions have not developed AI strategies, in a false belief that AI is in the future. But it’s here and it’s happening, and the change is expediential in its growth; we are in the change window for a massive paradigm shift, now is the time for immediate action. This is truly a golden opportunity for human resource professionals, organizational designers, business managers, business students, and workforce planners. Organizations that act, and act fast, will be the beneficiaries of the AI revolution. Dr. Tony Miller, MBA, FCIPD, FinstAM, MRSH, MAPS, MBPS, FILM, is adjunct professor specializing in productivity improvements through people and artificial intelligence (AI). In the past few years, he has published twenty books, one of which is in Chinese. Well traveled, he has worked around the world, in 36 countries in the past ten years, including the United States, and has acted as a specialist consultant for many top companies. His ability to continually create outstanding performance through people has resulted in his appearing on TV regularly; he designed a mathematical model to enable any organization to calculate precisely how many people it needs, essential for any implementation of AI applications. He is much sought after as a speaker and runs master classes and management briefings on introducing AI for organizational improvement.

Human Resource Management and Organizational Behavior Collection